Covid-19: Three economic scenarios

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Markets are governed by the duration and impact of the many measures being taken to limit and reduce the number of people contracting the COVID-19 virus. This was the week when the western advanced world changed dramatically, with the governments deciding to ban or advise against all events, tourism, entertainment and hospitality outside the home. The badly affected sectors will lose all or most of their turnover, leading to heavy losses and the need to take offsetting actions.

Without cash aid from the government, businesses will have to cease paying dividends, cancel capital spending, lay off many people and seek to negotiate better deals with landlords and suppliers. France has produced the best package so far to try to limit cash losses with state programmes. The USA and UK are working on ideas that could help but have not yet announced direct support for employment. The UK has cancelled all business rates for a year and offered direct cash grants of £25,000 to the smaller companies.

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