Many financial professionals are warning that the economy may not have the immunity to battle the coronavirus pandemic. According to the Organization for Economic Cooperation and Development (OECD), the global economy now faces “its biggest challenge since the financial crisis”.
“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 during this outbreak.
Business Advice (BA): Do you think the UK economy has already been hit harder by coronavirus than 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 the UK which was already weakened by the long-lasting political and economic uncertainty that has followed the Brexit referendum.
BA: What will be the impact be on 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 give to SME owners at this time?
MA: 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.
Sign up to our newsletter to get the latest from Business Advice.