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The here and now is grim but I can think of six reasons to be optimistic about an economic recovery:
1) Vaccines are being rolled out at pace:
The government wants to vaccinate four groups of people who are most vulnerable to COVID-19 by mid-February...
1) Vaccines are being rolled out at pace:
The government wants to vaccinate four groups of people who are most vulnerable to COVID-19 by mid-February...
That’s c14 million people. 2.3 million have received jabs (as of 10th Jan) with the UK delivering more than any other European country.
We are not on track to hit target yet but process is accelerating. The prize is the ability to lift restrictions quickly and with confidence.
We are not on track to hit target yet but process is accelerating. The prize is the ability to lift restrictions quickly and with confidence.
2) Households have cash:
Lockdown has caused hardship, forcing many into debt but a larger number of people have been enforced savers. When restrictions lift they will have money to spend.
The risk is inflation, if supply-side of economy can’t respond to a surge in demand.
Lockdown has caused hardship, forcing many into debt but a larger number of people have been enforced savers. When restrictions lift they will have money to spend.
The risk is inflation, if supply-side of economy can’t respond to a surge in demand.
3) Companies have cash:
Companies have borrowed heavily but corporate borrowing has been matched by corporate deposits.
In theory, come the recovery, businesses have the means to invest and create jobs. Although, in practice, they may instead use cash to repay debts.
Companies have borrowed heavily but corporate borrowing has been matched by corporate deposits.
In theory, come the recovery, businesses have the means to invest and create jobs. Although, in practice, they may instead use cash to repay debts.
4) Unemployment should peak at a lower level than feared.
Mass unemployment has been avoided because chancellor extended his furlough scheme.
c1 million people have lost their jobs since first lockdown began in March 2020.
Although, that number will rise even as recovery begins
Mass unemployment has been avoided because chancellor extended his furlough scheme.
c1 million people have lost their jobs since first lockdown began in March 2020.
Although, that number will rise even as recovery begins
5) The bounce back could be big:
The recovery between May and July surprised and delighted. We recovered almost 2/3 of lost output. There is reason to hope this will happen again.
But the longer restrictions last, the more firms go bust, the more long-term damage is caused.
The recovery between May and July surprised and delighted. We recovered almost 2/3 of lost output. There is reason to hope this will happen again.
But the longer restrictions last, the more firms go bust, the more long-term damage is caused.
6) Brexit is finally done:
Uncertainty cripples growth. By sealing a deal government has delivered clarity.
Companies can now begin to invest with confidence. Only issue is many have their hands full dealing with the chaos of a sudden wave of paperwork and new EU customs rules.
Uncertainty cripples growth. By sealing a deal government has delivered clarity.
Companies can now begin to invest with confidence. Only issue is many have their hands full dealing with the chaos of a sudden wave of paperwork and new EU customs rules.
