State of the Economy: Poor

Anne Marie Waters 

Tuesday 9th June 2020 

 

The news doesn’t get much better.  The coronavirus crisis carries on and on, our economy gets weaker and weaker, and the pinch is now beginning to bite.

Among job losses now being announced as a result of the virus are from BP.   The oil giant has announced the loss of 10,000 jobs as reduction in demand for oil hits.  Chief executive Bernard Looney told staff “The oil price has plunged well below the level we need to turn a profit.  We are spending much, much more than we make – I am talking millions of dollars, every day.”

That’s 10,000 more people in need of work in a market that is stagnant to say the least.  Many will require help, increasing the benefits bill, and increasing the tax burden that will inevitably be imposed when this crisis peters out.

Fashion brand Mulberry is also reporting job losses involving a quarter of its workforce.  The company said: “Even once stores reopen, social distancing measures, reduced tourist and footfall levels will continue to impact our revenue. As a result of this, we must manage our operations and cost base accordingly to ensure the company is the correct size and structure to reflect market conditions.”

In essence then, we are seeing the economic impact of social distancing, this time on retail, even before shops reopen.

Retail sales are down again in May, following an obvious huge slump in April, but online sales are up a huge 60%.  The question now is whether we will return to the shops in sufficient numbers, post lockdown, to keep the high street alive.  There are of course likely to be greater business and employment opportunities in online sales that can buffer some of the unemployment fallout, but certainly not all of it, or even most.

The British Retail Consortium said May had been “yet another month of struggle for retailers across the country.   For those shops whose doors remain shuttered, it was once again a tough month and even those who stayed open suffered reduced footfall and huge costs implementing social distancing measures.  While the month showed record growth in online sales, many retailers will be anxious to see whether demand returns to our High Streets when non-essential shops reopen from 15 June.”

Meanwhile, the United States has officially entered recession.  As the coronavirus crisis bites there, up to 22 million jobs are expected to be lost.  This year has brought an end to America’s longest ever period of growth, exceeding 10 years.

There is one piece of good news to leave you with; there may be signs of positivity, at least for the future, as trade deal talks begin with Japan today.  International trade secretary Liz Truss will speak with Japan’s foreign affairs minister Toshimitsu Motegi by video-link.

Truss said “We aim to strike a comprehensive free trade agreement that goes further than the deal previously agreed with the EU, setting ambitious standards in areas such as digital trade and services.  This deal will provide more opportunities for businesses and individuals across every region and nation of the UK and help boost our economies..”

Let’s hope she’s right, because post coronavirus, we are certainly going to need that boost.

 

Anne Marie Waters 

Leader 

For Britain 

Text ‘Join’ to 60777

Send this to a friend