This week was dominated by the economic reality of the lockdown now really starting to be seen.

• The Bank of England predicting this could be one of the longest slumps for over 300 years.
• Elsewhere the impact on business services could be seen in surveys, with the expectation this would be the worse decline in living memory…..and of course…
• We saw some significant job cut announcements with both Rolls Royce and Virgin Atlantic in the headlines.

All of this spending is increasing and can be seen in the public debt figures, with some discussion/concern on how affordable this is and whether the schemes need to be tightened.

To counter these impacts the UK government has been announcing relief programs and this week saw the launch of the Bounce Back loan scheme for smaller businesses…. just like previous schemes the uptake was significant… 100,000 loans in the first day and this again put pressure on the banks and their call centres to process the loans.

The results of this are that there are expected significant increases in business insolvencies to come… and of course, we are already seeing declines in activity in key areas such as the housing market and car purchases… two-thirds of households think their finances are going to be affected.

The financial services sector is going to have to react, in order to control risk and losses. We are seeing this already, more visibly in the US, where there is already a tightening of credit controls for new mortgages, and on credit cards. With the earnings announcements last week in the UK, we should expect to see more of this here… gathering extra data to determine the current risk of default for customers in this current situation is going to be important and common going forward.

Although consumers are saving in some areas, in others spending is increasing. Energy usage, in particular, was highlighted this week. It is increasing, an extra 37% on average, due to working from home. This will flow through to any affordability considerations too.

The market and industry is reacting and innovating in light of all this. Sometimes constraints can drive creativity; video banking is becoming more common for example, as is the use and inclusion of open banking… will this is be the turning point that drives adoption… it may well be.

Work culture is likely changing, with BMO predicting that 80% of employees will change working patterns to include more home working. All of this requires technology and there have been some signs of a backlash against this… I suppose all of this is about finding out about what this ‘new normal’ is going to be, and it may not be just a virtual version of what it was before…!

Elsewhere the lockdown continues to have other effects.

• A story on how quiet the earth has become, without the rumbling of traffic… or how
• Someone recreating their local pub, with friends in virtual reality… a great project (althought not sure I have the time or patience to do this)

Certainly, the sky does seem bluer, and birds louder than before….

..But we do still need to remember the virus is still there…. we should not get complacent, even as lockdown fatigue sets in. Pressure to release restrictions is mounting, and we wonder what the future path holds, and how we can maintain the progress in control to date. I am just hoping with the better weather getting outside will help.

Fingers crossed for the next few weeks. Have a good weekend everyone…. @chris_w_tweet

The lockdown appears to be changing in character this week. Certainly, there is some Zoom fatigue, however, it also seems people are starting to increasingly break restrictions too.

The monthly total death statistics were out this week. These cut through any statistical manipulation, with the impact of the virus being seen in the non-seasonal year over year peak. There was also a study using predictive modelling to predict the end of the virus. August to September is the latest by the maths if you are wondering.

There has been some discussion about whether the impact of coronavirus is worse in areas of poor air pollution, more details published this week. Also of interest this week was that smokers seemed to less likely to fall ill with the virus. More details needed.

There was more concern on the long term impacts of the current situation with the economy – generally negative with an 8% contraction, albeit with some business sectors booming.

For banks and in financial services, lenders have to date now approved 1.6m mortgage payment holidays. Payment holidays are also being widely used in small medium businesses too. Interestingly though insolvencies were down in England… although up in NI... (even though the NI economy is expected to weather the impact better due to government and health sectors).

The housing market is now really showing first signs of decline, with the market reportedly grinding to a halt. UK households seem to be holding back on borrowing too.

All of this, together with payment holidays, is putting pressure on the banks, some of which could be seen in their earning statements this week. (an interesting aside on the different accounting approach for recognizing loss in the UK/EU/ROW vs USA here too). There are some concern potential banking failures too (fin tech?).

For consumers the concern is this this has stored up potential issues down the road, and there will be a cliff edge once the measures end… Some of the banks are already getting ready, with staff hiring or previous changes being put on hold. (and on return to the office, will it be the same, with the end of the skyscraper, due to lift capacity and infection risk if this continues too… maybe more branch working?)

This is all a balancing act and time will tell, and especially depending happens with the next set (or extension) of economic protection measures from the UK government in May.

Outside of economics and finance, the COVID lockdown continues to generate changes in wider society.

The demise of cash has long been discussed… is this going to happen?.. there is certainly more pressure, and this may hasten the decline of ATMs, which was in discussion in the UK before all this started

At home, it also has the potential to change the internet, how we use it, and our relationship with it… it has now become essential. Some countries were more already more ready than others, and it is expected to accelerate development in areas.

Finally, Zoom fatigue is a thing, with now a whole host of zoom lockdown lingo. Working from home is hard and it appears we are all working longer as a result. If you are getting tired, this may be the reason why.

Next week is a big week, with the next review of government lockdown measures in the UK. (also an interesting ONS study to be released too). Let’s see how next week plays out. Have a good week everyone.