I am thinking about the likely consequences of the current crisis. I am not seeking to analyse why we are in this situation. I am not looking at structural issues per se. I and considering what the issues that we face now are, however they might have arisen, before then thinking about how we go on to address them. I am trying not to include more claims than is necessary, knowing that the demands will already b3 urgent and pressing. This is where I got to, without spending that much time on this:
Assumptions
- That the Covid 19 crisis is not yet over;
- Some degree of lockdown will continue for a while;
- Whatever happens, the economic implications of the events that have already happened as a result of the coronavirus crisis to date will continue for some years to come.
The likely consequences include:
- A significant increase in unemployment, which is likely to reach levels not known in current lifetimes;
- A significant increase in the number of corporate insolvencies as companies try to settle liabilities outstanding from or accrued during 2020 when their revenues, gross margins and so net profitability are unlikely to have recovered because of the continuing effects of Covid-19 on the economy;
- There are spillover consequences for personal solvency as those whose incomes have been impacted by furlough and unemployment are unable to settle liabilities, and in particular rents, mortgage liabilities, utility bills, council taxes and lease and credit obligations;
- There is likely to be a significant increase in homelessness;
- Property prices are likely to fall;
- The risk of a banking crisis caused by landlord and householder defaults is high;
- Claims for universal credit will increase, significantly, with nit all claims being met, and with a still incomplete system being tested to its limits;
- Demands on the NHS will increase significantly, including in poorly resources areas such as mental health;
- Child poverty will increase;
- Demand for child support services will increase significantly as their parent's lives are disrupted;
- Stress within society will increase significantly.
What have I got wrong, or missed that is a priority?
You touched on it in your last point, but the impacts will be localised and differential across the country and inequality will rapidly increase, along with all the negatives that brings.
Broadening the context, we might add…
Brexit – bringing food and medicine shortages?
6 May 2021 – Scottish Parliament Elections heralding the end of the Union?
The implosion of the Conservative party and leadership challenge.
Of course…
Famine amongst certain groups, higher rates of suicide, higher rates of imprisonment, prostitution, alcoholism, drug taking. Happy days with the caring Tories.
Hello Richard.
I’d add that the government shall try to use this crisis as cover to chip away at democracy. Society in general, and Parliament in particular, shall have to be vigilant.
I don’t think you have missed anything important but I do think that the UK is definitely on the slippery slope to complete chaos and failed state status. The impact of covid-19 and Brexit on peoples lives I think is going to end up with a “Can’t Pay – Won’t Pay” insurgency. People are not going to have the money to pay rent, pay off debts or to pay their taxes. Many will cease to pay income tax as their incomes fall drastically, will refuse to pay local taxes and to avoid paying VAT I think we will see an increase in theft and even resort to looting…..in other words a complete break down in law and order. The social contract which binds us together is dissolving fast, the UK state is losing the trust of the people and al this will lead to complete breakdown. Even MMT will have no answer to this. It is getting really scary as we rapidly approach a critical juncture. This outcome is not inevitable but we are veering pretty close to the edge now and there seems to be no coherent opposition yet to steer us back to safety.
Something that is important and gets overlooked by almost everyone is the catastrophic impact on the Arts and Culture. The Arts bring so much solace and enjoyment to people of all classes, nations and political persuasions, yet we are witnessing ongoing and wide-ranging devastation of the sector. Only the lucky few artists and organisations are receiving meaningful financial support; a huge majority have been cut adrift and see no future for themselves and their businesses. The result across all genres will be personal financial catastrophies and a huge loss of creative talent, while our world will be a duller, less imaginative place as a consequence.
I agree..
Pestilence, famine, war, death. Not necessarily in that order.
I have the strange feeling that we are on the verge of some very wide-ranging systemic changes, and not just in the UK. Almost anything seemed possible, post-1989, post-1997, until 2008, possibly even until 2012. Well, it now looks like things are going to get worse before they get better. If they get better.
What we need is some optimism. Not the vague blustered imagining of an unarticulated “new Jerusalem” (for pity’s sake – jam and Jerusalem tomorrow?) but a concrete plan to deliver a reasonable and sustainable standard of life for the many not the few. And again not just in the UK. Rebooting the millennium development goals, perhaps.
Agreed
And there is a lack of thinking on the issue
I am trying to do some
I am currently reading Naomi Klein’s “The Shock Doctrine”. In it she discusses how the Chicago school had a vaguely coherent (though based upon spurious morality) set of policies which could be implemented at the point of systemic change.
Were I a politician, I would be trying to formulate a progressive coherent set of policies which can be implemented when the proverbial does hit the fan. I think that time is not too far in the future …
I am working with others on that right now
There is no guarantee anyone will use it
The prospect of permanently lower interest rates will cause a number of financial consequences for the foreseeable future: lower annuity rates for those people about to retire over the next few years, decreased income for people already dependent on savings income, bubbles in alternative investment classes due to a “search for yield” leading to market volatility in all sorts of different asset classes, the increased potential for scam investments. There are offsetting effects such as cheaper loans and mortgages. To summarise the preceding: lower incomes for the old, increased indebtedness for the young. Low interest rates in themselves will increase the likelihood of a banking crisis as bank profitability from normal lending operations is hit for the foreseeable future (in addition to the credit risks which you already mention). Basic (non-violent) crime levels always rise in recessions which may not have serious macro ramifications in themselves but add to social unrest and especially can give cover to populist governments who wish to implement illiberal policies.
Noted
Thanks
Agree with what Nick Hudson says, and some others.
To maintain any sort of stability in society people require somewhere to live and some sort of income.
In my opinion this requires the housing market as we know it to cease to exist and be replaced by something radically different.
I suggest we need to see properties as homes instead of financial assets. I suggest the government revalues all homes in the U.K. based on some set of criteria. For example –
– land area occupied and is it carbon negative/positive
– total floor area of home
– carbon footprint of home
– type of build
– maintenance standard
The area where the property is located should not come into it, as it should be the property itself we value.
All properties should then have a fixed increase in value based around inflation, minus outstanding maintenance.
If a property is worth more in the market than the revaluation, it could possibly
– be held in perpetuity by the family, with zero inheritance tax
– sold to a buyer at the new valuation. The seller gets a percentage uplift from the government but also takes a percentage hit. Available once per person for one property mortgaged before the scheme is announced.
If a property is worth less in the market than the revaluation, it could possibly
– be sold for the new value if someone wishes to pay that amount
– be sold to the government for the new value with ownership of the property given to the local council. Available once per person for one property mortgaged before the scheme is announced.
Once completed maintenance of properties should be required, with the value of the property at sale reducing for lax maintenance.
Every constituency in the country should be somewhere worth living in, and properties there should be financially accessible to all.
I wouldn’t allow this for foreign ownership of property. In fact I wouldn’t allow foreign ownership of property or land at all.
I realise this doesn’t address rental issues.
I know people will think I’m mad for saying this but to hell with them. Property in the U.K. is a drug and it’s warping society.
I offer this as an idea, mad or not. We need more ideas on this subject, as what we currently have isn’t working for the benefit of most of society.
To think about
I think that there will be a further retrenchment of the state’s role in any remaining statutory functions or services justified in order to pay for the consequences of the epidemic. The consequences of that merge with the consequences you set out above.
I can actually see for example the end of Council house building all together given the proposals for the planning system.
Again, we have to remember that these Thatcherite zealots are nothing but extremists and are quite happy to sacrifice anything to get to the neo-lib nirvana they crave.
Society’s over-reliance on digital/online services, including banking and payment options, at the expense of face-to-face services, cash, etc. This comes at a time when many people will be unable to afford to maintain or replace their connective devices or pay ongoing tariffs–due to unemployment, and the general collapse of public services. It won’t take much for things to fall apart in this sphere.
Just imagine if we were to experience a coronal mass ejection in the wrong direction, as severe as the Carrington Event, and consider that it nearly happened in 2012.