Scarring: Mapping the damage of the lockdowns

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Governments are looking at the longer-term impact of lockdowns on their economies. Expect to hear more around the world about ‘scarring’ over the next few weeks.

Chastened governments are examining the damage that lockdowns have brought. They are cautious about the speed at which they can relax to get more people back to work. They are only too conscious that too relaxed an approach could induce a second wave of the virus.

Asking people to down tools again and stay at home for an even longer period next time to be safe would not be an easy thing to do. It would do even more damage to economies and to confidence, that precious feeling that powers both investment and consumption.

Governments are also concerned in the northern hemisphere that the return to autumn and winter may bring better conditions for the virus, which some think is weakened or destroyed by too much sunlight if not by heat. This gives government a short window to get some normal working and earning in before they need worry more again about the spread of the virus.

This winter it may be test and track systems which force local or regional shutdowns if the virus flares up. Treasuries do not fancy having to carry a third or more of their national workforces on benefits or subsidy schemes through the winter to keep them available for work in their old companies. The numbers involved become too huge.

View Full Article – published by Charles Stanley on 22nd May 2020