Will the UK economy collapse

Great Britain : The worst is yet to come


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The situation is serious because the Queen has spoken. Queen Elizabeth II has only allowed herself to be carried away five times in her long reign to address the nation outside of protocol. On Sunday evening - filmed from a safe distance - she conjured up the national spirit that led the country through the Second World War in the face of the corona epidemic. She hopes the British may one day be proud of the way the nation has managed the crisis with "self-discipline, quiet humor and camaraderie".

The British could use the Queen's symbolic pat on the back. Just over an hour after her television appearance, it became known that Prime Minister Boris Johnson, who had Covid-19, was hospitalized on Sunday evening. A precautionary measure, as its spokesmen assure.

In addition, the pandemic in Great Britain will not peak until Easter at the earliest. This weekend alone, more than 9,000 new cases of infection were counted there. More than 1,300 patients died from the virus disease Saturday and Sunday. The British will probably have to keep the contact and curfew for a long time to come. The economic damage to the country that actually wanted to prepare for Brexit is immense.

Unemployment rate of 8 percent?

Every day more shops are boarded up in the shopping streets and new bankruptcies are declared. For many companies, government financial aid comes too late and banks react too slowly. Almost a million Britons have applied for Universial Credit since the lockdown. The self-employed become desperate because their calls for help end up on answering machines and their e-mails are not answered.

Most economists in the world are currently expecting a global recession lasting six months, according to Focus Economics. The Institute for Fiscal Studies (IFS) estimates that the UK economy will shrink by at least five percent this year, more than during the financial crisis. The economy has never been so brutally stalled. Some economists like David Blanchflower, a former member of the Bank of England's monetary policy committee, expect the unemployment rate to rise to eight percent. Other economists do not dare to make predictions in this crisis situation.

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According to an estimate by the Center for Economics and Business Research (CEBR), sales losses in the manufacturing industry currently amount to 69 percent, in the construction industry to 50 percent, in wholesale and retail to 58 percent, in the hotel and restaurant industry to 79 percent . Numerous companies that have previously been troubled by the online trade or the fashion of take-away meals have to file for bankruptcy: the furniture store Laura Ashley, the department store chain Debenham’s and the restaurant chain Carluccios are just a few well-known British names that are now forced to close. Large companies like Jaguar Land Rover are losing billions of pounds to the current plant closings.

Highly indebted companies - such as the airline Virgin Atlantic - do not cope with the special situation as well as companies that are better financed, for example the airline British Airways. Business models that calculate with margins that are too tight no longer pay off. Tens of thousands of employees are being laid off. Now the thin social web of the British economy is taking revenge: the perpetual reliance on the minimum wage (£ 8.21 an hour), and the notorious zero-hour contracts that employ workers only when they need them. As well as the principle of hypocritically as "independent" designated employees who have to get by without social support.