If the western world can take anything from Coronavirus, perhaps it may be how much we have taken modern everyday functions for granted.
Tales of sporting events being cancelled, shops rationing their supply and a whole country being quarantined, stripped of their ability to “move freely” are reminding people of the Worldwar tales we learned about in history. However, we are not fearing missiles being launched, but instead catching a violent flu strain.
The UK and its European counterparts are however taking extreme precaution (much to the dismay of football and travel fanatics). With many employees being told to work from “self-isolation zones” i.e their sitting room.
But many financial professionals are warning the economy may not have immunity to battle this pandemic. According to the Organization for Economic Cooperation and Development (OECD), the global economy now faces “its biggest challenge since the financial crisis”.
As Rishi Sunak announced the first budget tailored to this crisis, many people are fearful of the stint this may put in Britains already rocky political challenges.
“With the world’s economy already weakened by trade wars and political turmoil, Covid-19 risks causing a global recession, if prompt and appropriate governments’ intervention are not implemented,” said Dr Maria Rana, an expert in economics and finance at the University of Salford Business School.
Below she answers our top industry queries amidst this outbreak..
Business advice (BA): Do you think the UK economy has already been hit harder by CV than opposed to SARS?
Maria Rana (MA): Although it is difficult to exactly quantify the overall economic impact of COVID-19, there is no doubt that it has already hit the UK’s economy harder than SARS in 2003. This is due to increased globalisation and the more significant role currently played by China in the global economy.
The country is now, in fact, the world’s second-largest economy and one of the UK’s major trading partners. Additionally, the spread of the Coronavirus has hit a UK already weakened by the long-lasting political and economic uncertainty that has followed the Brexit referendum.
BA: What trends do you expect to see happen during this outbreak for the UK economy?
MA: The emergency joint stimulus plan just announced by the Government and Bank of England should mitigate the negative economic effects of the virus. However, consumer and business confidence remain very low and turmoil is still dominating the financial markets.
Forecast economic growth for the UK in 2020 has been downgraded. According to the latest report published by the OECD, the UK’s economy is now expected to grow at 0.8% rather than 1%. This figure might well be too optimistic if we take into account the uncertainty surrounding the size and duration of the outbreak.
BA: What advice can you provide industry owners?
MA: Although specific advice depends on the size and industry within which the business is operating, the following is some general advice.
Businesses should make the most of the Government and central bank’s emergency plan, which has been defined by EY as “unprecedented” ( i.e. know the bureaucratic process and be aware of relevant deadlines).
Getting in touch with the local Chamber of Commerce can also be very beneficial for SMEs. Other recommendations to SMEs include, among others: the development of knowledge and alteration of supply-chains if necessary, development of contingency plans; constant and honest communication with key stakeholders such as employees, customers, suppliers and the local chamber.
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