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Rolling coverage of the latest economic and financial news, as investors brace to learn how many Americans lost their jobs last week
- Bank of England: Covid-19 is severe shock
- US weekly unemployment claims could hit a record
- More than one million Americans may have filed jobless claims
- Coronavirus – latest updates
- See all our coronavirus coverage
Newsflash: The Bank of England has left UK interest rates unchanged, at its scheduled meeting this week.
The spread of the disease and the measures that are likely to be needed to contain it have evolved significantly. The economic consequences of these developments are becoming more apparent and a very sharp reduction in activity is likely. Given the severity of that disruption, there is a risk of longer-term damage to the economy, especially if there are business failures on a large scale or significant increases in unemployment.
In the near term, many people will be unable to work for a period and others are adjusting their working arrangements. Many consumer-facing companies are now required to cease operations for a time, while other businesses have also needed to cease or scale back their activities. Household spending on social activities and other delayable forms of consumption is likely to decline materially. In an environment of heightened uncertainty, businesses are likely to postpone investment decisions. Exports are likely to weaken. These effects on economic activity will be offset partly by temporarily higher spending on essential goods and services. Nonetheless, business cashflows will be severely affected in a way that, without support measures, would threaten material numbers of businesses failing, and large and persistent rises in unemployment.
The coronavirus is dealing a body blow to global oil demand forecasts – and in the North Sea it is playing a role in growing the market’s crippling oversupply too.
Ineos has announced plans to postpone its summer maintenance on the North Sea’s most important oil pipeline to help reduce the need for staff to work together during national efforts to stem the spread of covid-19.
“This just adds another ripple to the growing oversupply pool of global liquids – an overhang for 2Q20 that is already so incomprehensibly massive that it will eventually force shut-ins as oil prices fall below short-run marginal costs and logistical challenges arise.”
* This article was originally published here
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