Or is it? There is no doubt that the impact of COVID-19 on peoples’ health and the hard working members of health care teams is extremely significant and something to be viewed with compassion and regret. However I’ve been thinking about the impact on businesses and economic indicators (Jan ‘20 to today)
- FTSE 100 – down by 24%
- FTSE 250 – down by 28%
- Brent Crude – down by 74%
- Unemployment up by millions in the `UK
- People accessing foodbanks up by 80%
- Business insolvencies accelerating
And this is after just over four weeks of “lock down” measures in the UK. I’d love to be corrected by someone more experienced in business and economics but the above speaks to me. It suggests to me one of two underlying issues.
1. That businesses in the UK (and with similar figures in the US and Japan, by extension much of the capitalist world) have been on a very weak footing. That the financial sustainability of very many businesses has been recklessly weak. You’ve not been able to sell your product or service for four weeks, just 20 working days and now your business is only worth 70-80% of what it was before. Really? Is the business model for so many firms so ‘hand to mouth’ that a disruption of four weeks is enough to cause this.
2. That market indicators are led by hype, but that this exaggerated negativity then leads to real failure. That the attitudes of those who drive the markets are like that of a manic depressive but worse than this. The negativity which starts as only an idea then morphs into reality and becomes a self fulfilling prophesy, but a prophesy based on weakly justified sentiment and not fact.
I see many articles from the hand-wringing journalists of the Guardian saying that ‘This should be the trigger for real social change, better wages and welfare.’ In my view this is a worthy aim, but unrealistic. More critical surely is the above. If our economic activity is to generate the wealth from which taxes can be drawn then shouldn’t we be looking instead to build rather better foundations upon which to build such a future. Aspirations are great, no I’d say essential, but you need to be able to fund them.