Anne Marie Waters
Tuesday 2nd June 2020
On the 15th of June, some shops in Britain will re-open, but we’re not quite clear yet how this will work. Will we be required to wear masks? Will there be a limit as to numbers inside the shop at any given time? What we do know is that we are very gradually taking steps to reopen our economy, and the good news is that the markets have reacted positively. The bad news is that we cannot pick up where we left off.
According to Shares Magazine yesterday, there were highs and lows on the stockmarket, but British business had responded well to the announcement of a date of June 15th. Associated British Foods, which owns Primark (due to reopen on the 15th), saw its stock price rise by 6.5% to just over £19. There were other rises too, demonstrating optimism, but it is a cautious optimism; there is a long way to go and it is unlikely to be pleasant.
With more than a quarter of the UK’s workers now paid by the state, the public purse is stretched to the limit. Nimesh Shah, partner at Blick Rothenberg, a tax advisory firm, told the Financial Times that “tax rises are inevitable”, and indeed they probably are. It is only a matter of how large these rises will be. Too large will be deeply unpopular for the Government, particularly given how much individuals and businesses will struggle to get back on their feet – more tax means less to spend and the obvious impact this has on business.
Meanwhile, the housing market has been transformed by the lockdown. Nationwide announced today that house prices fell 1.7% in May, the lowest for 11 years. Furthermore, house price growth fell from 3.7% to 1.8%, and residential property transactions fell by 53% compared with April of 2019.
The rental market, by contrast, has grown. Rightmove, the estate agent, has reported that demand for rentals is up 22% on last year. With lockdown restrictions easing (estate agents reopened in May), people have begun looking for new places to live at a growing rate. Break-ups and job changes caused by lockdown are believed to be primary drivers.
But with demand increasing for rental, the likelihood is of course that cost will increase along with it, and this could see homelessness rise and even more pressure placed both on Government and on public finances.
Holidays this summer are likely to be rare. The combined increase in unemployment and potential new rules on flights will see the global tourist industry stagger back to its feet over years, or even decades. Spain has ruled out UK holidaymakers returning to its shores until our coronavirus state has improved.
María Reyes Maroto, Spain’s tourism minister, said “Regarding the United Kingdom, there have been talks with tour operators but British data still have to improve, because it’s important to ensure that the person comes well and then returns well.”
Overall, the economic situation today is still pretty bleak. The impact of coronavirus isn’t yet fully understood, but high unemployment, high living costs, and high taxes – a perilous combination – are the obvious immediate results. This leaves the Government in a very difficult situation, and there is still no plan as to how they intend to deal with it.
Demanding payback from China would be a good place to start. For Britain insists China pay for what it has done, please help us by signing our petition here. Thank you.
Anne Marie Waters