Government ministers are warning that if the public flout the lockdown and current social distancing measures during the warmer weather, they’ll have no choice but to enforce stricter conditions. Latest numbers show the UK nearing 50,000 infected and a death toll of almost 5,000. Matt Hancock, the Health Secretary, said that the government could take further action and restrict the public’s freedom to exercise outdoors.
Meanwhile, the UK economy is already beginning to feel the squeeze. The much-awaited IHS Markit UK Purchasing Managers Index (PMI) for the services sector showed activity had crashed with a figure of 34.5 versus an expected 34.8. A figure above 50 indicates expansion and below 50 indicates a contraction. The record slump adds to the increasingly gloomy economic statistics that have been reported across the world, pointing towards a deep recession on an unprecedented scale. The UK services sector accounts for approximately 80 per cent of annual GDP.
In politics, Sir Keir Starmer was crowned Labour’s new leader. Mr Starmer promised to be critical but constructive during the coronavirus pandemic as he offered to work with the government. Prime Minister Boris Johnson invited opposition leaders to work with him, as he stressed, they had a collective duty to work together during this time of national emergency.
IHS Markit Eurozone services PMI crashed to 26.4 in March, from 52.6 in February in Friday’s data, the worst reading ever recorded. In Italy, services PMI slumped to a record low of 17.4 in March from 52.1 in February. Chief business economist at HIS Markit, Chris Williamson said “The data indicate that the eurozone economy is already contracting at an annualised rate approaching 10%, with worse inevitably to come in the near future.”
Another big problem facing the eurozone right now, is the failure to come up with a coherent stimulus package to fight the impact of the coronavirus. The Bank of England, the Federal Reserve, and the Reserve Bank of Australia have all announced rescue measures on an unprecedented scale but whilst announcing €750 billion of financial support, the European Central Bank and EU have failed to agree on a collective response. France, Spain and Italy are calling for a collective approach, which would support the whole block, but they face fierce opposition from Germany and countries in the north who are flatly against any package that involves debt mutualisation.
The US dollar has been on the back foot since the Federal Reserve announced a $2.2 trillion fiscal programme. The Fed’s support to the stumbling US economy and global markets has seen investors move away from the global safe-haven currency but with worldwide coronavirus infection numbers on the rise ( 1.2 million) and little light at the end of the tunnel, nervous investors are looking back to the US dollar for comfort. Coronavirus cases have now exceeded 300,000 in the US as the death toll nears 9,000, and with daily numbers continuing to soar, Donald Trump’s comments about having the US economy by mid-April seem distant.
As the coronavirus forced widespread closures of businesses, the US Bureau of Labor Statistics confirmed Non-Farm Payroll numbers contracted by 701,000. That number was in sharp contrast to February’s job gains and significantly worse than the expected 100,000 losses that economists had forecasted. It’s the first time the data has shown a loss since 2010 and given the data only includes figures up until mid-March, the number does not include the period that saw 10 million US citizens file for unemployment insurance.
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