State of the Economy: Unknown

Anne Marie Waters

Tuesday July 21st 2020

 

I say the state of the economy today is unknown because it felt like the only appropriate word (other than “terrifying” which probably wouldn’t help the situation!)

The government’s furlough scheme will soon end, and then UK business will need to stand on its own feet again in terms of staff costs, which will inevitably mean job losses: the “unknown” element refers to how many.

This isn’t a UK problem though, this is a major global problem.  This week for example, the President of Microsoft Brad Smith said the world is facing job losses of quarter of a billion, many of which are gone for good.  This is because post-coronavirus, the world will become more digital and more and more of our lives will be lived online.  This of course means major change for the global economy because how we do business, or buy products, will never be the same.

The situation is reflected here in the UK as we experience a “spike” in IT job advertisements.  According to the Recruitment & Employment Confederation, demand for web designers and developers has risen by 15.5% since June.

Deputy chief executive of TechUK Antony Walker said “We’ve seen two years of digital transformation happening in the space of two weeks.  A lot of business leaders we’ve been talking to, and survey data, shows that digital will be more important to their business, as a result of the coronavirus pandemic.”

Employment figures in Britain are dropping as can be expected, with 34,000 more unemployed in April to reach a figure of 1.3 million.

The rise in IT jobs is both good and bad news; good news for those who are trained, bad news for those who are not.  Non-IT jobs it seems are becoming more and more rare.

Meanwhile, UK borrowing is up.  In fact, it’s at record levels.  The government borrowed a record £127.9bn between April and June as it tries to keep on top of coronavirus costs.  (Prior to the pandemic, Britain was already in debt to the tune of 85% of GDP).  This borrowing is unlikely to stop any time soon.

Meanwhile, public sector workers such as doctors and teachers are to receive an above-inflation payrise.  Few would argue with a pay rise in normal circumstances, but given the strain already placed on the public purse, one wonders sometimes where Rishi Sunak is getting all this money from – and how he intends to pay it back.

There have been times through this pandemic that Sunak’s pockets have appeared rather deep and I suspect I’m not the only one somewhat on edge about how much deeper they can get.

Across in Brussels, the EU has finally come to an agreement about post-coronavirus help for business.  It has set aside 750 billion euros for the task.  I can’t help but wonder if it’s too little, too late.  The EU showed itself as staggeringly inept in dealing with this crisis, but luckily, after December 31st, that’s one coronavirus problem we won’t have to deal with.

 

Anne Marie Waters 

Leader

For Britain