If you were present during the 2008-09 financial crash, you will know just how many countries enabled crippling austerity in a bid to make up the deficit that formed globally. However, despite over a decade of hardship and having less than we need for the majority, governments have quickly undone all of the ‘good work’ that austerity was supposed to have done.
With the arrival of COVID-19 and the need for mass furlough in many industries, all of the billions ‘saved’ during austere times were simply added back onto the debt pile. Experts believe, then, that Spring 2021 is when reality is going to hit home.
This is going to be when we see a wholesale change in the way that countries are being run. The impact, too, is going to be felt likely for generations to come. Indeed, over 9m people were furloughed in the United Kingdom as a result of the need to shut down commerce. Over 350,000 people lost their jobs, too, and not far under half of those in employment found their earning taking a steady beating during the year of 2020. This, though, is merely the beginning of the cost consequence of continued lockdown.
If people cannot work due to a government decree, they still need to pay their bills and deal with things at home. They still have food to eat and things to buy; this is why the need to furlough everyone was so severe. This, though, has added billions onto the debt pile and it is expected that the return of the good weather in Spring 2021 is likely to bring with it some storms in the form of massive debt.
When will the economy recover from 2020?
Really? It would be impossible to say, if at all. The economy is essentially now in a stage where it owes so much that it would be impossible, without essentially destroying living quality for all but a few, to make up the deficit and clear the debt pile. As such, we are in a situation whereby government initiatives such as social security and furlough is likely to be increasingly limited to who is eligible for support.
Others will likely see avenues for support cut off if the virus still dominates come the Spring, and we might also see some pretty big changes to investment structure. Expect much of the post-Brexit bravado about infrastructure and building to come to a screeching halt for the foreseeable future.
At the moment, the UK – like most other nations – is in a dreadful place financially. The excess of the furlough spending that was needed has been taken on the chin, adding thousands of pounds per head of the population in debt. This is something that will be paid off for years to come and will likely remain a millstone around the neck of governments worldwide.
Make no mistake, this is just the beginning of the process – and unfortunately, happy endings might be in short supply as the debts are called in and reality hits.