Chief Economist’s Weekly Brief – “That was the week that was”

The UK switched its COVID-19 response strategy from mitigation to suppression after it became clear that both the death toll and clinical pressure would be intolerable. Vast swathes of the economy have effectively stopped. And monetary easing and unprecedented levels of fiscal stimulus, while supportive, cannot fully offset this. European countries imposed further civic restrictions, while the US Senate failed to pass the enormous $1.8 trillion package for coronavirus relief. Few weeks have the power of the one we just experienced. And it’s the shock of the new. 

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You’re gonna need a bigger boat… or a helicopter

That was the conclusion the Chancellor has come to. Less than a week after the Chancellor unveiled a £12billion package to deal with Covid-19, Rishi Sunak unveiled another MASSIVE financial package (£350bn) on Tuesday and has vowed to do ‘Whatever it takes’. This is the famous line Mario Draghi ECB President came out with in summer 2012 to ‘save the euro’. Fiscal rules have been thrown out the window. Borrowing and public spending will surge. 

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No two shocks are ever the same…

Those who thought that uncertainty had peaked at the end of last year will have had cause to think again over the past seven days or so. The fact the word Brexit barely surfaced in discussions around Budget 2020 and other economic events over the past couple of weeks speaks volumes. We have moved to an entirely new crisis that has very much overshadowed the UK’s departure from the EU.

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Chief Economist’s Weekly Brief – Catching

Parallels are being drawn between the coronavirus and the SARS outbreak in 2003. But the contours of the world economy have shifted over the past 17 years. China is 17% of global GDP. It was a mere 4% back then. So shuttered business, foregone spending and leisure trips, not to mention the supply-chain disruptions matter much more for the global economy. 

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