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The recession is event-driven, rather than cyclical or structural. Despite its depth, the recovery may be quick.

In the UK:

• Official forecasts from the Office for Budget Responsibility now predict the economy will shrink by 11.3 per cent this year, marking the largest fall in output for more than 300 years. Experts forecast that the economic scars will be felt until 2025. Source: Economy to remain 'scarred' by Covid until 2025 - FTAdviser.com published 25/11/2020

  • 300 years ago, the Great Frost swept Europe.
• Public debt set to top £2trillion by end May 2020 as the government borrows an estimated £300billion this year
• The number of people claiming employment benefits has soared by a record 856,500 to 2.1million during April 2020 (the first full month of the coronavirus lockdown). This despite the furlough scheme keeping millions formally in work.
• February to April saw the biggest fall in job vacancies since comparable records began in 2001, down 170,000 to 637,000.
• The furlough scheme is now supporting 7.5million jobs and is expected to cost a net £50billion.

Source: Coronavirus UK: Charts show economy in unprecedented recession | Daily Mail Online published 20/05/2020 except where otherwise indicated.

Across the ocean, the picture is not much better. 18 million people have been furloughed int he US since mid-March. (Source: You’ve Been Furloughed. Now What? published 26/05/2020) 6.6 million people applied for unemployment benefits in the week ending March 28, the single highest spike in U.S. history. (Source: How to respond when a crisis becomes the new normal)

In France, close to 100,000 companies covering 1.2 million workers have signed up for the government to pay a portion of their wages. (Source: How to respond when a crisis becomes the new normal)

Globally, 3bn people have experienced some form of lockdown. (Source)

China is most advanced in its recovery. Three months since lockdown, it has returned to around 90% of its pre-Covid performance. However, the missing 10% includes large chunks of everyday life. Travel on public transport and domestic flights are down by a third. Discretionary consumer spending, on such things as restaurants, has fallen by 40% and hotel stays are a third of normal. (Source)

The result may be a return to austerity before the economy has recovered from the last bout of it. This could include:

• public spending cuts and
• rising taxes (both in terms of increasing rates, and reducing tax breaks).

• Local government funding.
• The long-neglected social care problem.
• Pensions and entrepreneurs tax reliefs.