Tue 17 Mar 2020, 09:22 AM | Posted by editor
LETTER from Carl Mingard, Southend Labour Party
It was announced on TV on Sunday that the US Federal Reserve had slashed the bank rate to virtually zero and added $700bn of Quantitative Easing. This is the second action by the Fed in a week, and can only be read as a panic response. The markets responses on Monday were all, as expected, negative, and the pound has also continued to plummet.
The share values matter to the companies as this is what the banks base their lending on. The tanking of the pound (if prolonged) will cause a spike in inflation, and that will put pressure on the cost of living. It will also be a disincentive to foreign workers like nurses, to want to work in the UK, as the difference between their ‘local’ wage and UK wage will be reduced and also the lower exchange rate will limit the value of the money they send home.
This if prolonged will have a profound dragging effect on the whole economy, creating skill shortages.
The world economy has not got out of the recession trends from 2008, it has only managed to plaster over the cracks and limp along with very sluggish economic activity. There has been no profound upturn. Then we have this viral hit, on top of the Trump tariff stupidity and the effect that has had on world trade. This is just another hit that could turn the recession into a slump.
The general long term impact of this “virus shutdown” is not yet known, and may not be fully known for years, but many habits were already changing and are now changing profoundly and rapidly.
