Coronavirus In The UK – A Recession But Not A Depression?

Coronavirus has had a significant impact on global markets. From stocks and shares falling across the world to the impact of broken supply chains, COVID-19 has shocked governments and economists alike with its sudden and drastic effects.

Government reactions to the virus have been focused on stopping its spread. Measures such as self-isolating and social distancing are changing the behaviour patterns of people. In addition, the UK has closed down many places of economic activity, including pubs, clubs, bars, gyms and cinemas.

This will have a huge impact on the service sector. Businesses will have reduced or no cashflow while still having to pay outgoings, and many employees have already been out of work for a week.

While the government has suggested a range of measures to help ease this process, there will still be a significant economic hit felt across the country.

Recession Least Worst Option

However, the latest news from the UK government is that they are aiming to contain the economic effects to a recession, rather than a depression.

This means that employers will put their workforce into a temporary hibernation period, seeking to allow for normality to return as quickly as possible when the virus retreats.

Not firing workers is essential to this process to maintain the nation’s productive capacity, as it allows for normal service to be resumed quickly without having to find new staff.

While economic figures have not yet officially confirmed it, there is no mistaking that the UK is in a recession, along with most of the coronavirus-hit world.

However, the point of such government actions is to mitigate this as much as possible, ensuring that the recession does not become a depression.

Strategies

By ensuring that there are strategies and clear pathways to a quick return to growth and economic activity, including keeping existing technological infrastructure and not allowing businesses to be evicted for non-payment of bills and rent during this difficult period, the UK government has sown the right seeds.

The government can only do so much, though. There is also the unpredictable human element which needs to be considered, along with the virility of the virus which is not yet known.

Whether the UK government can stop a depression is not yet known, but their current steps are certainly heading in the right direction.