RISK OF “SYSTEMIC ECONOMIC CRISIS”
A leaked Cabinet Office briefing obtained by The Guardian has warned that the UK is facing the risk of a “systemic economic crisis” as the country completes its withdrawal from the European Union in the midst of the Covid-19 pandemic’s second wave. The confidential briefing, which dates from September 2020, goes on to outline a “notable risk” of coinciding crises during the winter, which could include an intense flu season, heavy flooding, co-ordinated industrial action, and enduring strain on the healthcare system due to the pandemic (The Guardian, p1).
Bank of England Monetary Policy Committee (MPC) member Michael Saunders has suggested that the long-term effects of Brexit may have a more profound impact on businesses than the coronavirus pandemic (Reuters). Mr Saunders explained that the effects of Covid-19 on firms were likely to be temporary, whereas the impacts of the UK’s departure from the EU could be “more permanent”. This followed comments made by the Bank’s governor Andrew Bailey on Monday, in which Mr Bailey said that a no-deal Brexit would cause longer-term economic damage than the pandemic (City AM).
BANK OF ENGLAND SAYS RISK OF CATCHING COVID-19 FROM BANK NOTES IS LOW
According to a study by the Bank of England, the risk of transmitting Covid-19 via polymer and paper bank notes is lower than on other day-to-day surfaces (Sky News). Researchers found the main infection risks in shops are due to close proximity to an infected person or handling of a shopping basket or trolley, PIN keypad, or touchscreen of self-checkout terminals
The investigation was carried out after the Bank of England (BoE) noted a decreased use of cash during the pandemic, with ATM cash withdrawals declining 30 per cent in early October (The Telegraph, £, p5). Concerns over viral transmission after handling cash were cited by over a third of the 71 per cent of shoppers who told a BoE survey that they were using less cash than before the Covid-19 pandemic. The Bank said: “It seems unlikely that demand [for cash] will revert fully to the levels before the pandemic, but it is unlikely to stay at the levels we are seeing today.”
NEWS IN BRIEF
The chancellor Rishi Sunak will present the government’s Spending Review at around 12:30pm in Parliament today. The chancellor’s statement will outline plans for public sector pay, NHS funding, and distribution of funds for the devolved administrations (BBC News).
According to Zoopla’s house price index, the number of house sales agreed this year remains 38 per cent higher than 2019. More than 100,000 additional house sales are expected during the first three months of next year, as buyers seek to complete purchases before the end of the stamp duty holiday (The Guardian, p36).
In a positive step for borrowers who are on closed mortgage books or have mortgages with unregulated firms and are currently unable to switch to a new product – often referred to as ‘mortgage prisoners’ – the relaxation of lending criteria by the Financial Conduct Authority has enabled active lenders to offer customers, who are up to date on repayments, new mortgages (Daily Mail, p50).
According to a report by the National Audit Office (NAO), the UK government’s rush to secure personal protective equipment (PPE) for healthcare workers during the Covid-19 pandemic incurred a cost of £10 billion to the taxpayer (Financial Times, £, p2).
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