The economic impact of COVID in the UK depended on where you live
Deprived areas were by far the hardest hit.
COVID brought rapid and lasting economic change around the world. But in the UK, the level of impact depended on where you lived when the virus arrived.
Our research shows that the economic difficulties experienced during periods of social restrictions were particularly stark for those in deprived neighbourhoods.
During the first national lockdown, for example, we found that 23% of people in the most deprived parts of the UK were unable to afford day-to-day expenses or to save for the future. Food bank usage was reported at 9%. In the least deprived places, those figures were 6% and 0.5% respectively.
The impact on employment followed a similar pattern, with 10% of workers from the most deprived areas experiencing a job loss in the early months of the pandemic, compared with only 4% in the least deprived areas. Overall, the people who live in the UK’s most deprived neighbourhoods fell further behind through the pandemic.
This corresponds with previous data that lays bare how being poor limits a person’s ability to cope with – and recover from – abrupt changes in economic conditions. Mostly, this stems from a lack of capacity to soak up financial shocks (having savings, for example) and from the nature of state welfare provision.
With COVID, the sudden restrictions placed on the labour market, alongside an absence of childcare, placed many in uncharted waters. Among them, single-parent households were much more likely to have experienced job loss or a reduction in working hours.
A report by the independent Women’s Budget Group found that the socio-economic effects of COVID were particularly severe for women with disabilities, women from minority ethnic groups, and women of migrant status. Again, this underlines how the pandemic exposed and amplified existing vulnerabilities.
In terms of emergency support, the temporary universal credit increase (which provided an additional £20 a week to the standard allowance) helped to reduce overall inequality. And the furlough scheme (plus similar support for the self-employed) reached many in potential difficulty – but not all.
Brought in to prevent potential mass unemployment and pay workers a replacement wage, these policies excluded many in the most precarious positions, including an estimated three million on zero-hour contracts, agency workers and the newly self-employed.
But those eligible for employment support were not immune from difficulty. About one-third of the 11.2 million workers furloughed saw their income fall below the official low-pay threshold. A further 6% ended up behind with their bills as a result of large income falls, high expenses and low savings.
Filling the gaps in state support were family, friends and community groups, many of which were set up in direct response to the pandemic. Informal transfers of money from these sources were common for those on the lowest incomes, regardless of where they lived.
This highlights a failure of state support to fully mitigate the effects of COVID restrictions for those facing financial, food and housing insecurity. Despite the government spending over £70 billion on emergency financial assistance, a combination of insufficient payments and problems of access left many reliant on informal forms of support. In addition, there is evidence that the stigma surrounding benefits put a lot of people off applying for help, even when they really needed it.
Our analysis found that working-age adults were more likely to have received financial support from family or friends (8%) than apply for universal credit (4%). We also found that this kind of reliance was more likely among those who had been furloughed than those who had continued working through the pandemic, and even more widespread for those who had lost their job, suggesting that the furlough scheme, while not perfect, was better than mass job losses.
Today, while the worst effects of COVID seem to be behind us, the risks of job losses, business failures and debt defaults remain. In the UK, recession is expected, inflation is high, and energy bills are soaring. Of particular concern are those for whom the pandemic has increased their financial vulnerability. They are not well placed to weather this coming crisis.
Read more: New data shows COVID will continue to have a negative financial impact on many UK households
Rather than scale back state financial support, the government needs to ensure the poorest and most vulnerable are protected. In doing so, they would guard against the scarring effects of unemployment and debt.
There is also a role for targeted regional investment. The financial impacts of the pandemic were most keenly experienced by those in places with long histories of deeply entrenched disadvantage. Without help, the hardship and insecurity wrought by the pandemic risks becoming ingrained, and with it, the geographical concentration of poverty that our analysis has uncovered.
Julie MacLeavy received funding from the Regional Studies Association (Small Grant Scheme on Pandemics, Cities, Regions and Industry).
David Manley received funding from the Regional Studies Association (Small Grant Scheme on Pandemics, Cities, Regions and Industry)
Jamie Evans received funding from the Regional Studies Association (Small Grant Scheme on Pandemics, Cities, Regions and Industry)
Katie Cross received funding from the Regional Studies Association (Small Grant Scheme on Pandemics, Cities, Regions and Industry).recession unemployment pandemic lockdown recession unemployment uk
“We Are Headed For Another Train Wreck”: Bill Ackman Blames Janet Yellen For Restarting The Bank Run
"We Are Headed For Another Train Wreck": Bill Ackman Blames Janet Yellen For Restarting The Bank Run
Yesterday morning we joked that every…
Yesterday morning we joked that every time Janet Yellen opens her mouth, stocks dump.
Yellen opens mouth and stocks dump— zerohedge (@zerohedge) March 21, 2023
Well, it wasn't a joke, and as we repeatedly noted today, while Jerome Powell was busting his ass to prevent a violent market reaction - in either direction - to his "most important Fed decision and presser of 2023", the Treasury Secretary, with all the grace of a senile 76-year-old elephant in a China market, uttered the phrase...
- YELLEN: NOT CONSIDERING BROAD INCREASE IN DEPOSIT INSURANCE
... and the rest was silence... or rather selling.
Commenting on our chart, Bloomberg's Mark Cudmore noted it was Yellen who was "to blame for the stock slump", pointing out that "the pessimistic turn in US stocks began within a minute of Janet Yellen starting to speak."
The S&P 500 rose almost 1% in the first 47 minutes after the Fed decision. Powell wasn’t the problem either: the index was 0.6% higher in the first 17 minutes after his press conference started.
Why am I picking that exact timing of 2:47pm NY time? Because that is the minute Yellen started speaking at the Senate panel hearing. The high for the S&P 500 was 2:48pm NY time and it fell more than 2.5% over the subsequent 72 minutes. Good effort.
Picking up on this, Bloomberg's Mark Cranfield writes that banking stocks globally are set to underperform for longer after Janet Yellen pushed back against giving deposit insurance without working with lawmakers. He adds that "to an aggressive trader this sounds like an invitation to keep shorting bank stocks -- at least until the tone changes into broader support and is less focused on specific bank situations." Earlier, we addressed that too:
*YELLEN: NOT CONSIDERING BROAD INCREASE IN DEPOSIT INSURANCE— zerohedge (@zerohedge) March 22, 2023
At least until spoos drop below 4K again
Looking ahead, Cranfield warns that US financials are likely to be the most vulnerable as they are the epicenter of the debate. Although European or Asian banking names may outperform US peers, that won’t be much consolation for investors as most financial sector indexes may be on a downward path.
The KBW bank index has tumbled from its highs seen in early February, but still has a way to go before it reaches the pandemic-nadir in 2020. Traders smell an opening for a big trade and that will fuel more downside. Probably until Yellen blinks.
And if Bill Ackman is right, she will be doing a whole lot of blinking in days if not hours.
While we generally make fun of Ackman's self-serving hot takes on twitter, today he was right when he accused Yellen of effectively restarting the small bank depositor run which according to JPMorgan has already seen $1.1 trillion in assets withdrawn from "vulnerable" banks. This is what Ackman tweeted:
Yesterday, @SecYellen made reassuring comments that led the market and depositors to believe that all deposits were now implicitly guaranteed. That coupled with a leak suggesting that @USTreasury, @FDICgov and @SecYellen were looking for a way to guarantee all deposits reassured the banking sector and depositors.
This afternoon, @SecYellen walked back yesterday’s implicit support for small banks and depositors, while making it explicit that systemwide deposit guarantees were not being considered.
We have gone from implicit support for depositors to @SecYellen explicit statement today that no guarantee is being considered with rates now being raised to 5%. 5% is a threshold that makes bank deposits that much less attractive. I would be surprised if deposit outflows don’t accelerate effective immediately.
Ackman concluded by repeating his ask: a comprehensive deposit guarantee on America's $18 trillion in assets...
A temporary systemwide deposit guarantee is needed to stop the bleeding. The longer the uncertainty continues, the more permanent the damage is to the smaller banks, and the more difficult it will be to bring their customers back.
... but as we noted previously pointing out, you know, the math...
Math: $18 trillion in deposits, $125 billion in the deposit insurance fund. https://t.co/Zsu2RsJk41 pic.twitter.com/nb3Ypnt1gd— zerohedge (@zerohedge) March 21, 2023
... absent bipartisan Congressional intervention - which is very much unlikely until the bank crisis gets much, much worse - this won't happen and instead the Fed will continue putting out bank fire after bank fire - even as it keeps hiking to overcompensate for its "transitory inflation" idiocy from 2021, until the entire system burns down, something which Ackman's follow-up tweet was also right about:
Consider recent events impact on the long-term cost of equity capital for non-systemically important banks where you can wake up one day as a shareholder or bondholder and your investment instantly goes to zero. When combined with the higher cost of debt and deposits due to rising rates, consider what the impact will be on lending rates and our economy.
The longer this banking crisis is allowed to continue, the greater the damage to smaller banks and their ability to access low-cost capital.
Trust and confidence are earned over many years, but can be wiped out in a few days. I fear we are heading for another a train wreck. Hopefully, our regulators will get this right.
Narrator: no, they won't.
China’s Auto Industry Association Urges “Cooling” Of Price War, As Major Manufacturers Slash Prices
China’s Auto Industry Association Urges "Cooling" Of Price War, As Major Manufacturers Slash Prices
Just hours after we wrote about maniacal…
Just hours after we wrote about maniacal price cutting in the automotive industry in China, China's auto industry association is urging automakers to "cool" the hype behind price cuts.
The statement was made in order to "ensure the stable development of the industry", Automotive News Europe reported on Tuesday.
The China Association of Automobile Manufacturers even went so far as to put out a message on its official WeChat account, stating that "A price war is not a long-term solution". Instead "automakers should work harder on technology and branding," it said.
The consumer disagrees...
Recall we wrote earlier this week that most major automakers were slashing prices in China. The move is coming after lifting pandemic controls failed to spur significant demand in China, the Wall Street Journal reported this week. Ford and GM will be joined by BMW and Volkswagen in offering the discounts and promotions on EVs, the report says.
Retail auto sales plunged the first two months of the year and automakers are facing additional challenges in trying to transition their business models to prioritize EVs over conventional internal combustion engine vehicles.
Ford is offering $6,000 off its Mustang Mach-E, putting the standard version of its EV at just $31,000. Last month, only 84 of the vehicles were sold, compared to 1,500 sales in December. There was some pulling forward of demand due to the phasing out of subsidies heading into the new year, and Ford had also cut prices by about 9% in December.
A spokesperson for Ford called it a "stock clearance".
Discounts at Volkswagen are ranging from around $2,200 to $7,300 a car. The cuts will affect 20 gas powered and electric models. Its electric ID series is seeing price cuts of almost $6,000. The company called the cuts "temporary promotions due to general reluctance among car buyers, the new emissions rule and discounts offered by competitors."
Even more shocking is Citroën-maker Dongfeng Motor Group, who is offering a 40% discount on its C6 gas-powered sedan, now priced at $18,000.
Kelvin Lau, an analyst at Daiwa Capital Markets, told the Journal that automakers are also trying to get rid of 500,000 vehicles collectively stored in their inventory, most of which are older vehicles that won't meet new emissions standards.
David Zhang, a Shanghai-based independent automobile analyst, added: “Some car makers have been seeing very few sales. At this rate, the manufacturers’ production and dealership networks will collapse.”
COVID origins debate: what to make of new findings linking the virus to raccoon dogs
New reports suggest the pandemic’s origins may be linked to raccoon dogs sold at Wuhan’s Huanan Wholesale Seafood Market. A virologist explains.
The origin of SARS-CoV-2, the virus that causes COVID, has long been a topic of heated debate. While many believe SARS-CoV-2 spread to humans from an animal at Wuhan’s Huanan Wholesale Seafood Market, others have argued the virus was accidentally leaked from a lab at the Wuhan Institute of Virology.
Over the past week there has been intense activity surrounding the emergence of new data relevant to this question. In particular, reports emerged that the pandemic’s origins may be linked to raccoon dogs which were being sold illegally at the market.
The excitement stemmed from a re-analysis of raw data generated as part of official investigations into the role of the Huanan Wholesale Seafood Market in the outbreak.
The team of international scientists working on this re-analysis (from North America, Europe and Australia) alerted the World Health Organization and discussed the topic in an article published in The Atlantic. And the scientists themselves have now released a report on the issue, providing greater detail.
So what can we make of their findings? Will this development shift the course of the ongoing debate? Let’s take a look.
The Huanan market
In January 2020, writing about the emergence of what we now call SARS-CoV-2, I stated the importance of understanding how this pandemic began. It remains important to determine the virus’s origins because this knowledge may help us stop the next pandemic occurring.
Even very early in 2020, it was clear that the central Chinese city of Wuhan (a major metropolis and travel hub) was the epicentre of the outbreak. Within Wuhan, the Huanan seafood market stood out as it was associated with many – but not all – of the earliest cases. Indeed, the market was closed on January 1 2020, animals were culled, and the site was disinfected.
Suspicions arose given the role that animal trade and markets had played in the emergence of the closely related SARS-CoV-1 virus (which caused SARS, a widespread outbreak of viral respiratory disease) nearly two decades earlier. Evidence emerged that the Huanan seafood market also sold live mammals, including a fox-like mammal known as a raccoon dog, that we now know are susceptible to SARS-CoV-2.
Later epidemiological and genetic analyses further focused in on the market, and even specific stalls within it, as being the origin of the pandemic.
Read more: The original Sars virus disappeared – here's why coronavirus won’t do the same
The new data
As part of the official investigations into the market, swabs were collected from various parts of the market in the two months after it shut down at the start of 2020. The scientists who undertook this research, from the Chinese Center for Disease Control and Prevention, posted their analysis as a pre-print (a study yet to be peer-reviewed) in February 2022.
In this, the team concluded that the market likely played a significant role in SARS-CoV-2’s early spread, but that they couldn’t detect the virus in samples taken directly from animals. They reported that all the virus evidence found was associated with humans, and it was therefore likely the virus had been brought into the market by humans, not animals, and so perhaps the pandemic began elsewhere.
However, prior to any official peer-reviewed publication, the raw data from this work was released on an open scientific database called Gisaid. And the group of scientists who re-analysed this data did actually find an association between SARS-CoV-2 and animals, in particular raccoon dogs in the market.
They found DNA from animals mixed in with SARS-CoV-2 in a number of samples from the market. Some positive samples contained no human DNA and mostly raccoon dog DNA. This mix of virus and animal material is consistent with an infected animal – not a human – shedding virus, which is what you might expect if SARS-CoV-2 originated from animals brought into the market. Unfortunately, samples from a living raccoon dog were either not taken or not reported, and the official investigation makes no mention of raccoon dogs.
Where to from here?
While this latest data is one additional piece of the puzzle that supports an origin of the pandemic linked to Wuhan’s animal trade, it is unlikely to provide irrefutable evidence. It’s important to note it’s also a pre-print.
Ideally, we would like animal samples from early December 2019, and to compare animal virus genomes with human ones. It will also be crucial to follow events backwards through the animal trade and farming systems to work out where the animals got the virus from in the first instance.
Further, we must bear in mind that the virus could have easily been given to a raccoon dog by an infected human, or that the association between raccoon dog DNA and SARS-CoV-2 may be coincidental.
Read more: We want to know where COVID came from. But it’s too soon to expect miracles
However, evidence is accumulating that official investigations have left a gap in their research – particularly around the role that animals like raccoon dogs and the wildlife trade played in the origins of the pandemic.
While it may be unlikely that we will ever get concrete evidence as to how SARS-CoV-2 entered the human population, we can still think pragmatically and seek to alter behaviour and practices to reduce the chance of a new pandemic. One immediate target would be food systems (encompassing farm to fork), and how to make farming and the wildlife trade safer for all, potentially by enhancing virus surveillance in animals.
Connor Bamford receives funding from Wellcome Trust, UKRI, SFI and BMA Foundation.disease control center for disease control pandemic coronavirus genetic dna spread wuhan europe world health organization
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