Coronavirus: where the world stands now

The coronavirus epidemic continues to sweep the globe, with huge economic and social consequences. Bloomberg estimated last week that it could cost up to €2.7trn in lost output – “equivalent to the entire GDP of the UK”.

Stockmarkets have crashed dramatically. The UK’s FTSE 100 has lost 31% of its value in the last month; the FTSE 250 has lost 36%. France’s CAC40, Germany’s DAX and Spain’s IBEX indexes have lost similar amounts. And in the US, the S&P500 and the tech-heavy Nasdaq have both lost 29%.

China’s economy ground to a halt while it was in lockdown. The rest of the world is set to follow suit. As the virus takes hold on every continent, how are the authorities reacting? China seems to have got over the worst of the pandemic, but elsewhere, Europe especially, countries are deep in the throes of fighting the virus.

The World Health Organisation has declared that Europe is now the “epicentre” of the virus, and says aggressive measures are necessary to contain its spread. Many governments have placed strict restrictions on their citizens; travel between countries is becoming very difficult as no-fly bans are introduced and strict controls on who can enter a country and from where. Where travellers are allowed in, many must self isolate for up to two weeks.

The EU is to ban all travel into the Schengen area for non-EU nationals, with exemptions for medical staff and “regular cross-border commuters” reports the FT. At least ten Schengen countries have already imposed their own restrictions on travel within the area. Many countries have shut their schools and banned large gatherings, including sporting fixtures. The UK is unusual in keeping its schools open.

As for stimulus, the ECB will provide banks with loans at minus 0.75% and up its bond-buying programme by €120bn, says Reuters. It has relaxed its capital requirements for banks, but has not lowered interest rates.

As the second-worst-hit country after China, Italy has imposed draconian regulations. The country is in lockdown, with checkpoints at airports and rail stations. People may leave their homes for “justifiable work reasons”, basic necessities and health emergencies only. It is earmarking €25bn to support business and workers, with extra funding for the health service and suspending mortgage payments across the whole country.

France has stepped up measures and is “at war” says President Macron. Schools, cafes and many shops are closed, but these measures have proved “insufficient” says the BBC. Citizens must now stay at home with fines for those venturing out for non-essential reasons, with land borders closed on Tuesday. The finance minister has pledged €45bn to help businesses, plus a €300bn small business loan state guarantee scheme, with President Macron saying that “no French company, whatever its size, will be exposed to the risk of collapse”. 

Germany has banned religious services and closed schools, bars, clubs and leisure facilities. Germans have been told not to make arrangements to go on holiday. The government has increased public investment by €12.4bn euros until 2024 but has so far not announced any stimulus specifically to deal with the effects of the coronavirus. 

Spain is also in lockdown, with police patrolling to ensure people remain in their homes apart from to carry out essential tasks or to go to work. Spain’s government has not announced any wide-ranging stimulus measures.

Ireland has closed all schools, museums, tourist sites and pubs until the end of the month. The Irish government is spending €3.1bn in stimulus – around €630 per person, says the Irish Times. 

The US has banned travel to and from the EU’s Schengen area and has urged Americans against non-essential travel and avoid gatherings of more than ten people. They have also been encouraged to avoid bars and restaurants. The guidelines are “recommendations, not requirements”, however, says the Wall Street Journal.

Republican senator Mitt Romney has called for every American to get a payment of €1,000 immediately, to help “ensure families and workers can meet their short-term obligations and increase spending in the economy”. He has als proposed grants to small businesses. Airlines have asked for a €50bn bailout, reports the New York Times, with Nicholas E. Calio, chief executive of Airlines for America, calling for “urgent action.” “This is a today problem, not a tomorrow problem,” he said.

The Federal Reserve has cut interest rates to near-zero, and the Treasury Department will defer tax payments for some individuals and businesses, reports Reuters, “aiming to provide more than $200bn of additional liquidity to the economy”.

Canada is closing its borders to most non-residents, has closed schools and suspended large gatherings, including sporting events. It has lowered its key interest rate by 0.5% to 0.75%. PM Justin Trudeau announced an aid package worth “up to ç$20bn” reports Global News Canada. Finance Minister Bill Morneau said C$10bn would be available to businesses through the Business Development Bank of Canada, and that further details would be unveiled before the end of the month. “These are extraordinary times and that means we are ready to take extraordinary measures”, he said.

New Zealand is insisting that any arrivals undergo quarantine for 14 days. The government has announced a stimulus package of NZ$12bn (££5.8bn) – equivalent to 4% of its GDP, says the Straits Times. PM Jacinta Arden says the government is “pulling out all the stops to protect the health of New Zealanders and the health of our economy”.

Australia is planning A$17.6bn in stimulus reports the country’s 7 News network. More than six million people on benefits will receive a A$750 one-off cash payment, with between A$2,000 and A$25,000 each going to more than 700,000 businesses.

Japan’s central bank is to double the purchase of ETFs to around ¥12trn (£90bn) a year; has put aside ¥2trn to buy corporate bonds; ¥180bn a year to buy real-estate investment trusts; and ¥4bn to support small businesses.