For clarity, nowhere have I said that a disagree with lockdown, on principle or otherwise. I believe it was necessary in the circumstances, but also firmly believe and accept that it has (and will have) a significant economic impact. I believe that the effect of that should be factored into policy decisions going forward. I also did not say that I believe the way Sweden had dealt with this correctly, simply that at the moment, in my opinion we're not able to say.
As for the point in bold, I'm not. I'm doing the exact opposite and looking at the actual reality of running a business day to day.
I'm not going to get into a debate with you about the historic ramifications of pandemics, save to say that the last one on this scale was 100 years ago. The "reality of the situation" is that the "real numbers" that matter for an enormous number of businesses (with SME's accounting for a very significant percentage of employers in the UK) are not estimates of general economic contraction but the amount of cash flow they have on a daily, weekly and monthly basis.
I am involved in running a business and our first worry during the pandemic has been the ability to meet our own liabilities, despite being confident of our long term future in our market. I also (in a professional capacity) advise numerous businesses across various sectors. The people who run these businesses are not yet worrying about the general economic downturn which may follow, but keeping the business trading long enough to try and have a shot at trading through it.
A business which supplies services on 60 day payment terms (often common place and an industry norm), cannot supply anyone without product. It cannot produce product without labour. After furlough will have to pay its staff for at least two months before any money comes in. if it hasn't traded for months and it has no cash to do so, it's in trouble. It may also not be able to pay rent, following which the Landlord has the right to simply change the locks on the office. Liquidation is then an inevitability for that business. This is a problem being faced by many companies at this stage. Directors of companies have to act prudently to avoid personal liability and a lot are not prepared to borrow, or put their house on the line in times of uncertainty.
You are absolutely right to suggest that in the long term a general economic dip may well cause businesses to close their doors regardless of a lock down but businesses can, and often do trade through difficult times. However, the immediate problem of cash flow is what will kill a lot of the business that go under, even though they were profitable before and for a lot of business that is a direct impact of not being able to trade for three months.
You know what, I'm not going to argue with you. You have your views and that's fair enough.
You've said the lockdown was necessary in the circumstances, but also said that "the cure may be worse than the disease", the number of people dying from suicide, missed cancer screenings and various other ailments as a result of the lockdown may well be higher than the number dying from covid, and that the economic outcomes will lead to more death in the long run. If you look into that argument in any detail what you're really saying is the lockdown wasn't a good idea, as it's causing more damage than not going into lockdown.
If you were looking at the reality of the situation across the economy as a whole, rather than in a few instances close to you, you would at least assess the numbers presented. Here is the conclusion from the analysis of real transactional data:
This paper uses transaction data from a large bank in Scandinavia to estimate the effect of social distancing laws on consumer spending in the COVID-19 pandemic. The analysis exploits a natural experiment to disentangle the effects of the virus and the laws aiming to contain it: Denmark and Sweden were similarly exposed to the pandemic but only Denmark imposed significant restrictions on social and economic activities. We estimate that aggregate spending dropped by around 25 percent in Sweden and, as a result of the shutdown, by 4 additional percentage points in Denmark. This implies that most of the economic contraction is caused by the virus itself and occurs regardless of whether governments mandate social distancing or not. The age gradient in the estimates suggest that social distancing reinforces the virus-induced drop in spending for individuals with low health risk but attenuates it for individuals with high health risk by lowering the overall prevalence of the virus in the society.
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I advise numerous businesses across numerous sectors in a professional capacity too. We don't have a different view because we're seeing different signals, it's because we're focusing on different elements.
I agree that a long-term economic dip is not particularly relevant to businesses struggling to pay their rent right now. The reality is there is already a short-term economic dip that does have immediate consequences for these businesses. Sweden's unemployment has increased by a historic amount irrespective of the lockdown because that economic hit was swift and expansive. The Swedish central bank expect unemployment to reach 10% this year, and it could reach its highest levels in the last 40 years. It isn't my opinion that the pandemic has been the main contributor to job losses, it's a simple summary of the evidence. Those aren't long drawn-out economic effects like a normal recession you're alluding to, Sweden are already at 9% after 1% increases in both April and May.
The reality is the UK has done unusually well at protecting employment so far, and at least part of that is because of the government measures directly tied to the lockdown. If they had let all businesses run as they want to then there would be no furlough programme and because of the collapse in consumer spending, the supply chain disruptions and the increase in running costs, a good chunk of people that were furloughed would have been laid off already. Many of those that are getting laid off now and over the next few months would have been laid off months ago. We do know that, conclusively, because Sweden have already experienced that. The UK would have seen a significantly greater increase in unemployment because the UK was hit harder by the virus too.
The lockdown brings its own obvious economic impact, it hurts businesses in different ways, but you're comparing it to a reality that we know wouldn't have existed. If you don't want to look at the transactional data comparing Sweden and Norway, you can look at the transactional data
across the US. Take Texas for example. Clothes spending had fallen by 50% before the stay-at-home order was in place, and without the government assistance that came with the lockdown, lots of those businesses simply wouldn't have been able to survive. Overall spending had fallen by 10% by the time the first measure was implemented - public schools closing - and it is at the same level now, over two months after the stay at home order was removed, because the pandemic does cause massive economic damage. It isn't speculation at this point.
Companies that operate on razor-sharp margins couldn't have survived for months and months with revenue levels reduced to that degree, piled on top of the additional costs that came with essential public health measures. There's obviously nothing that could be done for international tourism and the various industries that rely on it either. The lockdown has created problems for businesses who didn't fall into those buckets because of the instant cash hit, and they're the businesses you're keen to focus on, but it protected other businesses who were absolutely certain to be decimated by the natural economic effects of the pandemic anyway. The model you have of trading through difficult times is a completely different economic reality to the one this virus posed. You don't want to believe that, nor do you want to assess the evidence, because it's easier to blame the lockdown.