Coronavirus won’t delay Brexit – but could cause recession

#Brexit special section Economy Health and Education

Brexit will not be delayed by the coronavirus outbreak, a spokesman for the prime minister has confirmed, saying the UK will not ask for an extension to the transition period which expires on December 31, 2020.

However, the outbreak could push the UK’s economy to the brink of recession, warned Goldman Sachs as the number of confirmed cases continues to rise in Britain and around the world.

When asked if the outbreak could affect the UK-EU discussions about the future trading agreement post-Brexit, the Boris Johnson’s spokesman said “no”.

They added: “That work has been continuing throughout, and I’d expect it to carry on as planned – no change.”

UK coronavirus cases rise to 90

Talks between the UK and EU started on Monday, since when the number of recorded cases of the coronavirus in the UK has risen to 90.

Downing Street said it will announce when the plan to battle the virus switches from phase one ‘Contain’, to phase two, ‘Delay’.

The chief medical officer Prof Chris Whitty told MPs on the health and social care committee that the country was now “mainly” in phase two ‘delay’, but still following aspects of the first phase, ‘contain’.

Phase two could see school closures, more people working from home, restrictions on public transport and the banning of large scale events.

In an interview with ITV’s This Morning programme today (Thursday), Johnson tried to reassure viewers, saying “we need to strike a balance” in responding to the virus adding it would be “business as usual” for the “overwhelming majority” of people.

Flybe collapses, 2,000 jobs at risk

The PM’s comments follow the collapse of UK airline FlyBe into administration, putting some 2,000 jobs at risk.

The Telegraph reports the “final nail in FlyBe’s coffin” was its failure to get the government to cut the airline passenger duty, while the BBC states Grant Shapps, the transport secretary, said: “Unfortunately, with the situation that has developed with [coronavirus], an already weak company, I’m afraid, just hasn’t been able to survive.”

Coronavirus cuts UK’s growth forecast

Goldman Sachs, a “leading global investment banking, securities and investment management firm”, said the UK economy is on course to record zero-growth for a second consecutive quarter and warned output may shrink by -0.2% in the next – putting the UK “on the cusp of an official downturn”, which is defined by two successive quarters of negative growth, reports the Guardian.

The impact of the virus has seen the UK growth forecast by analysts at Deutsche Bank halved to 0.5% and it is expected the new governor of the Bank of England (BoE), Andrew Bailey will announce interest rate cuts to respond to the outbreak.

BoE governor – need to act quickly to minimise ‘shock from the virus’

Bailey told the House of Common’s treasury committee  that the BoE and Treasury are in talks to “ensure the effects of this shock from the virus are not too damaging to many forms of activity – and particularly to small and medium-sized firms”, adding: “We’re going to have to do that very quickly.”

However, the new governor – who takes over from Mark Carney on March 16 – said the BoE lacked “any great room for manoeuvre” given the current 0.75% interest rates are already close to the lowest in the bank’s 325-year history.



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