[Politics] Economy Shrinks 20% in April

Bold Seagull · Jun 12, 2020

Radio 4 Today, and presumably other outlets will report this as a record figure, ‘eye watering’ etc. however, while I’m no friend of the government, this seems low given we shut the country down? What were we expecting, just 5 or 10%?

No one went out, no shops open initially for that month, hospitality/travel completely dead, many building sites closed (only to start reopen shortly after as guidance was given).

John Timpson of the Timpson shop chain said that we controlled that shutdown so for the first time in history, we’ve effectively controlled that drop. He made a bit of sense and said it’s not the April/May figures we need to be alarmed about, it will be recovery figures as restrictions ease that will be key indicators.

Personally, given the scale of the shutdown in April, 20% seems expected, maybe even low?

darkwolf666 · Jun 12, 2020

Would love to see Amazon's UK sales figures for lockdown period...

nicko31 · Jun 12, 2020

Don't worry an export led recovery is coming from January 1st, gonna be the biggest bounce back in history...

Bold Seagull · Jun 12, 2020

darkwolf666 said:
Would love to see Amazon's UK sales figures for lockdown period...

All the supermarkets, Amazon, online retailers and couriers all recording big profits weren't they, think that was already out there. Amazon reported revenue was up, but profit overall was down due to all the measures they've had to introduce worldwide to remain open and efficient with restrictions in place.

Bold Seagull · Jun 12, 2020

nicko31 said:
Don't worry an export led recovery is coming from January 1st, gonna be the biggest bounce back in history...

Is this simply going to force the Brexit hand in that everyone needs to recover, there is a shared uniform hit to all markets. I always try to see things positively, if there is anything positive to have from either Covid or Brexit, perhaps it is that we emerge closer than we might have down and trade continues much as it did. Can we afford not to? Or am I smoking the wrong kind of pipe for my pipe dreams? :smokin:

nicko31 · Jun 12, 2020

Not sure some supermarkets will do quite as well as some expect, online delivery is a loss leader for them, Amazon now that's a different ball game

Is it PotG? · Jun 12, 2020

nicko31 said:
Don't worry an export led recovery is coming from January 1st, gonna be the biggest bounce back in history...

Indeedy-do

Poojah · Jun 12, 2020

I think you need to look at it in context. Under normal circumstances the economy will either grow or shrink by a fraction of a percent in a given month - 0.5% in a single month is typically a huge shift.

So, what you’ve got here is 40x bigger than something that would be a lead headline in its own right in usual times. That, six months ago, would have seemed an utterly profound proposition.

You’re right of course that many industries have shut down entirely, but a lot of that money simply ‘moves’. There was no such thing as hospitality in April, but just look at the surge in spends in supermarkets. High street retail, which was struggling anyway, will have largely moved to digital spending, etc.

Don’t forget that job losses have been limited, under the circumstances, by the remarkable furlough scheme, so the ability for the public to spend is probably artificially high too at this time. I totally see where you are coming from, but I wouldn’t underestimate the significance of ‘only’ a 20% decline in the economy.

nicko31 · Jun 12, 2020

Bold Seagull said:
Is this simply going to force the Brexit hand in that everyone needs to recover, there is a shared uniform hit to all markets. I always try to see things positively, if there is anything positive to have from either Covid or Brexit, perhaps it is that we emerge closer than we might have down and trade continues much as it did. Can we afford not to? Or am I smoking the wrong kind of pipe for my pipe dreams?

Well from the looks of things we've already capitulated, waving stuff through at Dover means waving stuff through from ROW, tariff free.

Stat Brother · Jun 12, 2020

darkwolf666 said:
Would love to see Amazon's UK sales figures for lockdown period...

Great the bigger the profit the more tax they pay...

,,,oh.

sparkie · Jun 12, 2020

nicko31 said:
Well from the looks of things we've already capitulated, waving stuff through at Dover means waving stuff through from ROW, tariff free.

Good news for the citizens in the street that the supply chains won't collapse though, so no need to stockpile in advance.

Bold Seagull · Jun 12, 2020

Poojah said:
I think you need to look at it in context. Under normal circumstances the economy will either grow or shrink by a fraction of a percent in a given month - 0.5% in a single month is typically a huge shift.

So, what you’ve got here is 40x bigger than something that would be a lead headline in its own right in usual times. That, six months ago, would have seemed an utterly profound proposition.

You’re right of course that many industries have shut down entirely, but a lot of that money simply ‘moves’. There was no such thing as hospitality in April, but just look at the surge in spends in supermarkets. High street retail, which was struggling anyway, will have largely moved to digital spending, etc.

Don’t forget that job losses have been limited, under the circumstances, by the remarkable furlough scheme, so the ability for the public to spend is probably artificially high too at this time. I totally see where you are coming from, but I wouldn’t underestimate the significance of ‘only’ a 20% decline in the economy.

Agree, not underestimating the profound impact, however perhaps I haven't seen a prediction of what was expected? When you think those engines of the economy; construction, engineering, hospitality closed, it was always going to be big, even if people hoarded and caused a big supermarket spend in April, that doesn't counteract the wider impact.

Typically a drop or shrink isn't necessarily predicted, it comes as a shock, you're reacting to the shock. As you've said, we've shut down the economy and immediately put measures (whether enough or not) to see us through the drop that we knew was coming.

Stat Brother · Jun 12, 2020

If in 3 years time we find we've 'got away with it', we ought to lockdown once every 5 or 10 years, just to help people reset their values (for want of a better expression)

Denis · Jun 12, 2020

If the government relax the quarantine rules so people can go on holidays. People then go to shops to buy new clothes, shoes, books to read on holiday etc. Maybe it doesn’t make much difference to men, but as someone who works in retail, the ‘basket spend’ is much higher when ‘Mum’ is buying for the family holiday.

beorhthelm · Jun 12, 2020

Bold Seagull said:
All the supermarkets, Amazon, online retailers and couriers all recording big profits weren't they, think that was already out there. Amazon reported revenue was up, but profit overall was down due to all the measures they've had to introduce worldwide to remain open and efficient with restrictions in place.

profits from supermarkets were for the previous year, i dont think any have announced for the lockdown period yet. Amazon reported upto end of March. we wont get numbers for Q2 until July.

ManOfSussex · Jun 12, 2020

nicko31 said:
Not sure some supermarkets will do quite as well as some expect, online delivery is a loss leader for them, Amazon now that's a different ball game

Increased staff costs too for supermarkets, plus fuel and clothing sales dropped like a stone in lockdown.

nicko31 · Jun 12, 2020

ManOfSussex said:
Increased staff costs too for supermarkets, plus fuel and clothing sales dropped like a stone in lockdown.

The discounters like Aldi & Lidl I suspect out on top again, still decent sales and haven't needed to discount as much

Jim in the West · Jun 12, 2020

Yet again, we are "World Beating". Following hard on the heels of just about the worst Covid-19 death rate, we suffer pretty much the worst economic hit. You have to admire Boris and his chums.

Jim in the West · Jun 12, 2020

Bold Seagull said:
Personally, given the scale of the shutdown in April, 20% seems expected, maybe even low?

To put it in context, the biggest monthly fall in GDP in the aftermath of the Global Financial Crisis was ONE percent.

Steve in Japan · Jun 12, 2020

I might be wrong, but logically retail is not going to recover to anywhere like previous levels. People were already using shops just to check things out, before ordering online. See Debenhams, BHS etc etc. I can see specialist independents surviving and perhaps doing well, but not the usual chains.

Still, lots of housing development opportunities creating town centre flats. And easing the housing shortage without adding traffic.

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