Latest / Stephanomics / How Covid Laid Bare America’s Economic and Political Divides

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How Covid Laid Bare America’s Economic and Political Divides · Stephanomics

• 0:04
  Speaker 1: We are ready now more than son. Where did you
• 0:08
  Speaker 1: start and where are you going? Yes? But I got Germany?
• 0:13
  Speaker 1: And where are you from from? Shop? Okay? What's in
• 0:17
  Speaker 1: your van? I have a biscuits. Have you had food? Yes?
• 0:21
  Speaker 1: The airport they give yours half a bottle of water
• 0:24
  Speaker 1: and one more bread. But I don't need the pool.
• 0:27
  Speaker 1: I want to go home. Hello, and welcome back to Stephanomics,
• 0:37
  Speaker 1: the podcast that brings the global economy to you. And
• 0:40
  Speaker 1: I have to say the global economy has had a
• 0:42
  Speaker 1: pretty busy Christmas and New Year. You heard they're a
• 0:46
  Speaker 1: frustrated lorry driver caught up in the chaos that hit
• 0:49
  Speaker 1: Britain's ports when France suddenly closed its borders to all
• 0:53
  Speaker 1: UK traffic just days before Christmas. The closures were due
• 0:57
  Speaker 1: to COVID fears, not Brexit, but we're the trade deal
• 1:00
  Speaker 1: between the EU and Britain at that point still not signed.
• 1:04
  Speaker 1: The frantic scenes on the coast felt like they might
• 1:07
  Speaker 1: be a sneak preview to what would happen when Britain
• 1:10
  Speaker 1: fully left the European Union at the start of this year.
• 1:13
  Speaker 1: Our UK Economy reporter Lizzie Burden wented over before Christmas
• 1:17
  Speaker 1: and has been keeping an eye on what's been happening
• 1:19
  Speaker 1: at the ports since January one. We have her report
• 1:22
  Speaker 1: in a minute, along with the chat with senior UK
• 1:25
  Speaker 1: economist Dan Hanson about the new third national lockdown in
• 1:30
  Speaker 1: the UK and what it will do to the economy.
• 1:33
  Speaker 1: That's another thing that's happened in the past few days.
• 1:42
  Speaker 1: But first I thought we should pay a call on
• 1:44
  Speaker 1: a corner of America, which this week held the fate
• 1:46
  Speaker 1: of Joe Biden's presidency in its hands, Georgia. Mike Sasso
• 1:50
  Speaker 1: is our US Real Economy reporter based in Atlanta, Georgia.
• 1:54
  Speaker 1: Some of you will remember he's given us a picture
• 1:56
  Speaker 1: of what's happening in his state a few times since
• 1:59
  Speaker 1: the pandemic began. Mike, thanks for joining us again. I mean,
• 2:03
  Speaker 1: you've been right at the center of the action this week,
• 2:07
  Speaker 1: with those Metropolitan Atlanta votes apparently making quite a big
• 2:11
  Speaker 1: difference to the chances of the two Democrats who seem
• 2:15
  Speaker 1: to have become US sentences this week, giving control of
• 2:19
  Speaker 1: the Senate to President Biden's side. What's the past few
• 2:23
  Speaker 1: days been like for you? Yeah, yeah, it's been a
• 2:26
  Speaker 1: little bit crazy to see Georgia at the center of everything.
• 2:30
  Speaker 1: There's been a huge effort among canvassers, these are activists
• 2:35
  Speaker 1: and whatnot calling different populations. I didn't get a ton
• 2:39
  Speaker 1: of calls. However, my wife, who is a Latina, she's
• 2:45
  Speaker 1: of Cuban heritage, she was just hit up constantly, almost
• 2:51
  Speaker 1: every day by different groups. I believe the latest estimate
• 2:55
  Speaker 1: or something like five million dollars in commercials spent, which
• 2:59
  Speaker 1: is an ex straordinary amount in just in Georgia's just
• 3:02
  Speaker 1: on these runoff races. I have a little eight year
• 3:06
  Speaker 1: old daughter. She could she could remember each of the
• 3:09
  Speaker 1: four candidates. She could remember the taglines. Um, there's a candidate,
• 3:16
  Speaker 1: Democratic candidate, Raphael Warnock, who was sort of branded by
• 3:19
  Speaker 1: his opponent as radical quote radical liberal Raphael Warnock. My
• 3:24
  Speaker 1: that is burnished into my daughter's brain at this point.
• 3:28
  Speaker 1: They tried to combat that, all of those relentless attacks
• 3:31
  Speaker 1: on Warnock by having just pictures of him and footage
• 3:34
  Speaker 1: of him with puppies. I thought was a very straightforward
• 3:37
  Speaker 1: response to that. And you you wrote a piece for
• 3:40
  Speaker 1: us talking about the relative strengths that Georgia has had
• 3:46
  Speaker 1: in coming through the pandemic and perhaps also getting quite
• 3:51
  Speaker 1: a lot of benefit from the from the government. Support
• 3:54
  Speaker 1: there's been sure well. As we talked about several months ago,
• 4:00
  Speaker 1: earlier in the pandemic, Georgia opened relatively early from lockdown.
• 4:05
  Speaker 1: This was I believe we opened in late May, reopened
• 4:09
  Speaker 1: the economy to some to some criticism. Uh, most businesses
• 4:14
  Speaker 1: in many businesses open here in May and June, which
• 4:17
  Speaker 1: is before many other states around the United States. Uh,
• 4:21
  Speaker 1: there's a lot of theory that that helped Georgia. There
• 4:24
  Speaker 1: has been an unusual and probably good phenomenon around the
• 4:28
  Speaker 1: country of a growth and entrepreneurship, a surprising surge in
• 4:33
  Speaker 1: small startups during this pandemic, and a lot of that
• 4:36
  Speaker 1: got started in Georgia and the South, and it was
• 4:40
  Speaker 1: a little bit slower to get going in some of
• 4:42
  Speaker 1: the northeastern and western states. And some people attribute that
• 4:46
  Speaker 1: to the reopening of the economy. And and also our
• 4:50
  Speaker 1: unemployment rate in Georgia has generally been better. We're at
• 4:53
  Speaker 1: five point seven percent unemployment, which is a full point
• 4:57
  Speaker 1: less than the national economy, which is at six point
• 5:01
  Speaker 1: seven percent unemployment. So people are doing a relatively better
• 5:06
  Speaker 1: at least job wise, than than there are elsewhere. And
• 5:09
  Speaker 1: I noticed that you had some some of the industries
• 5:12
  Speaker 1: that the states dependent on have done relatively well. I
• 5:15
  Speaker 1: think carpets doing well and poultry, is that right. I'm
• 5:21
  Speaker 1: more familiar with carpet carpets and that industry, which is
• 5:26
  Speaker 1: kind of up in the northwestern part of the state Dalton,
• 5:29
  Speaker 1: which is where interesting a where President Trump came in
• 5:33
  Speaker 1: campaigned the other day. Um. That's that's benefiting largely from
• 5:37
  Speaker 1: the huge boom in in in housing Atlanta. The Federal
• 5:44
  Speaker 1: Reserves keeping a track and actually helping the lower interest
• 5:47
  Speaker 1: rates has had a big effect on the housing market. Uh.
• 5:50
  Speaker 1: And that is creating a great, just a boom, particularly
• 5:54
  Speaker 1: in mortgage refinancing. So there's just just people refinancing, just
• 5:58
  Speaker 1: all including my self, I refinanced, almost all of my
• 6:02
  Speaker 1: friends have refinanced a mortgages lately. That's creating a tremendous
• 6:06
  Speaker 1: have and have not scenario in Georgia. UM. We we
• 6:11
  Speaker 1: took a look at some of the counties around Atlanta,
• 6:13
  Speaker 1: and in a primarily white affluent county on the north
• 6:18
  Speaker 1: side of Atlanta called Forsyth County, you compare that to
• 6:21
  Speaker 1: a primarily black county on the south side of Atlanta
• 6:26
  Speaker 1: called Clayton County. The white affluent county, the rate of
• 6:30
  Speaker 1: refinancing is ten times that of the primarily black county
• 6:35
  Speaker 1: on the south side of Atlanta, despite relatively the same
• 6:38
  Speaker 1: population in each county. So it tells you, you know, affluent,
• 6:43
  Speaker 1: white collar in particularly white communities are benefiting to much
• 6:47
  Speaker 1: greater extent than blue collar in minority communities. From all
• 6:50
  Speaker 1: of this, well, it's been such a persistent theme, and
• 6:54
  Speaker 1: I would imagine it did feed into some of this
• 6:56
  Speaker 1: much high high turnout among those parts of the population
• 7:01
  Speaker 1: in this election. If the Democrats have now got control
• 7:06
  Speaker 1: over the Senate, it's a very very narrow control, so
• 7:09
  Speaker 1: they're not gonna be able to do everything they might
• 7:11
  Speaker 1: want to do, but it does look like they will
• 7:14
  Speaker 1: be able to support more fiscal stimulus. That's certainly what
• 7:18
  Speaker 1: investors are now betting on. Do you think that that
• 7:22
  Speaker 1: desire for more fiscal support fed into this election result
• 7:28
  Speaker 1: at all or was it just about other things in
• 7:30
  Speaker 1: the end. I think, you know, I think we'll have
• 7:34
  Speaker 1: to look at some exit polling, and we're not to
• 7:36
  Speaker 1: tell for sure. I do think it was interesting that
• 7:40
  Speaker 1: the day before the election, this is on Monday, President
• 7:44
  Speaker 1: elect Biden stumped for the two Democratic candidates and did
• 7:50
  Speaker 1: make a very strong point that if Georgians elect the
• 7:54
  Speaker 1: two Democratic candidates, there would be these additional two thousand
• 7:59
  Speaker 1: dollar stimulus checks sent to Americans. That's a lot of
• 8:03
  Speaker 1: money for you know, particularly some low income and just
• 8:07
  Speaker 1: frankly a lot of people. And could the promise of
• 8:10
  Speaker 1: two thousand dollars stimulus checks have motivated some people? Yeah,
• 8:15
  Speaker 1: absolutely I could. I could see it, so I do
• 8:17
  Speaker 1: think it probably had some some effect. Mike Sasso, thanks
• 8:22
  Speaker 1: so much. I hope you're not you're going to get
• 8:24
  Speaker 1: a relief now from all those ads for a while.
• 8:26
  Speaker 1: Certainly my daughter is happy that the commercials have ended.
• 8:30
  Speaker 1: That's that's for sure. Thanks a lot. We've heard again
• 8:41
  Speaker 1: and again in this pandemic about that unequal impact of
• 8:44
  Speaker 1: the crisis on different people and places. One reporter who's
• 8:48
  Speaker 1: consistently brought that home to us in the US is
• 8:52
  Speaker 1: Sean Donnan. He did it again recently with a magisterial
• 8:55
  Speaker 1: report for Business Week that came out on almost the
• 8:58
  Speaker 1: last day of usure. Now with just a taste of
• 9:02
  Speaker 1: what he uncovered, it's easy to forget, but an economy
• 9:10
  Speaker 1: is really just a group of people. So if you
• 9:12
  Speaker 1: want to understand the state of the U. S. Economy
• 9:15
  Speaker 1: right now, You could just start by talking to one
• 9:17
  Speaker 1: of those people, like Donna Swangler. Donna is forty two.
• 9:22
  Speaker 1: She has three kids, ages seven to sixteen. She and
• 9:26
  Speaker 1: her husband, Brian live in Ben Salem, Pennsylvania, just north
• 9:29
  Speaker 1: of Philadelphia, and right now, at the start of one
• 9:33
  Speaker 1: they are struggling because of this pandemic, which in really
• 9:38
  Speaker 1: knocked them, like the U. S. Economy, off what had
• 9:41
  Speaker 1: been a pretty good course. As she made clear when
• 9:43
  Speaker 1: we first spoke in early December, I have three young
• 9:47
  Speaker 1: kids at home, so basically I'm here all day with them,
• 9:51
  Speaker 1: and he worked when he can, and you know, of course,
• 9:54
  Speaker 1: we just do what we have to the chart stay healthy,
• 9:58
  Speaker 1: because if he can't work, then were we will lose everything.
• 10:03
  Speaker 1: In March last year, as the US lockdown in response
• 10:07
  Speaker 1: to the first wave of the pandemic, Donna lost her
• 10:10
  Speaker 1: job scanning paper records. It was something she had been
• 10:13
  Speaker 1: able to do from home while her youngest child was
• 10:15
  Speaker 1: still getting ready to start school. Until all of us
• 10:18
  Speaker 1: went home and the courts and other offices she worked
• 10:21
  Speaker 1: for stopped generating that paperwork. She was able to get
• 10:25
  Speaker 1: unemployment benefits, but the hundred dollars a week she was
• 10:28
  Speaker 1: getting ran out in mid December, and though Congress passed
• 10:31
  Speaker 1: a new nine billion dollar rescue over the holidays that
• 10:35
  Speaker 1: extends her benefits, it's still unclear when she will start
• 10:38
  Speaker 1: actually receiving them again. Meanwhile, her husband, Brian, who has
• 10:43
  Speaker 1: a small contracting business doing landscaping, home renovations and the like,
• 10:47
  Speaker 1: is seeing his work dry up again. As COVID nineteen
• 10:50
  Speaker 1: cases search, the Swanglers exhausted the few savings they had
• 10:55
  Speaker 1: getting through last year, and as Congress was debating a
• 10:58
  Speaker 1: rescue plan over the hollow days, Donna was increasingly nervous
• 11:02
  Speaker 1: about what lay ahead. There's no savings left now, so
• 11:06
  Speaker 1: it all depends on what my husband brings in. And
• 11:09
  Speaker 1: if we can't make rent and food and we're going
• 11:12
  Speaker 1: to start falling behind. And with that, it didn't no vision.
• 11:17
  Speaker 1: I'm scared. I don't know what's going to happen, because
• 11:21
  Speaker 1: we have nowhere to go. If we leave here like
• 11:23
  Speaker 1: there is, we don't have a family member, we could
• 11:26
  Speaker 1: go crash with them, you know, being the five of us,
• 11:30
  Speaker 1: there's there would be nowhere for us to go, which
• 11:34
  Speaker 1: means right now, the Swanglers like the U. S. Economy
• 11:37
  Speaker 1: or in a month to month scramble to get through.
• 11:43
  Speaker 1: How are you guys gonna get through the winter? Um,
• 11:49
  Speaker 1: we don't know. Just after the new year, Donna and
• 11:54
  Speaker 1: I exchange texts. The five member family on January five
• 11:58
  Speaker 1: received the six dollar ahead stimulus payment negotiated by Congress
• 12:02
  Speaker 1: over the holidays. The three thousand dollars was welcome, but
• 12:05
  Speaker 1: it went quickly to covering bills the family had left
• 12:08
  Speaker 1: over from December and the rent on their home for January.
• 12:11
  Speaker 1: Donna says, but that is a long way from where
• 12:14
  Speaker 1: Donna expected to be a year ago, which is a
• 12:17
  Speaker 1: point that seems to occasionally get lost in discussions about
• 12:20
  Speaker 1: the U. S. Economy and the recovery still underway. A
• 12:23
  Speaker 1: year ago, Donna Swangler was getting ready to go back
• 12:26
  Speaker 1: to work full time as a medical office assistant, something
• 12:30
  Speaker 1: she had done before having kids. The idea was to
• 12:32
  Speaker 1: earn more money so that she and her husband could
• 12:34
  Speaker 1: start building up more of an economic cushion. She hasn't
• 12:38
  Speaker 1: abandoned the idea, but like many things in America and
• 12:42
  Speaker 1: Europe right now, those plans are on hold. Not my
• 12:46
  Speaker 1: RESI mail, you know, updated and everything. Um, so I
• 12:53
  Speaker 1: was really hoping to start doing that, but you know,
• 12:56
  Speaker 1: the beginning of March was when everything so it feels like,
• 13:03
  Speaker 1: I guess the one steps for over two steps back.
• 13:11
  Speaker 1: That's a common story in the US, where things like
• 13:14
  Speaker 1: the shift of virtual schools have hit many people and
• 13:17
  Speaker 1: particularly women hard. A little over fifty seven percent of
• 13:21
  Speaker 1: Americans were working in November, which was the lowest level
• 13:24
  Speaker 1: scene since the lowest that is, if you don't count
• 13:29
  Speaker 1: even worse months of that came before that. The start
• 13:34
  Speaker 1: of vaccinations means there's promise ahead, of course, but the
• 13:37
  Speaker 1: US is going to spend much of playing catch up,
• 13:41
  Speaker 1: which is one reason that the Biden administration and others
• 13:43
  Speaker 1: have already started talking about the need for another rescue package.
• 13:48
  Speaker 1: That doesn't mean Donna Swangler thinks she's getting back on
• 13:50
  Speaker 1: the path she and her husband were planning on anytime soon,
• 13:54
  Speaker 1: not until the kids are back at school at least.
• 13:56
  Speaker 1: I don't think it's a possibility of this year because
• 13:58
  Speaker 1: school is so uncertain up to the end of the year.
• 14:01
  Speaker 1: I can't be calling out of work, especially at a
• 14:04
  Speaker 1: job in a local office, you know, for three days
• 14:06
  Speaker 1: in a row because my kids have to be out
• 14:08
  Speaker 1: of school, which means that for much of one Donna
• 14:11
  Speaker 1: Swangler's plan is to hang in there and survive week
• 14:14
  Speaker 1: to week, month to month, hoping that some day before long,
• 14:18
  Speaker 1: she and her family and the rest of the U
• 14:21
  Speaker 1: S economy can put a pandemic behind them and get
• 14:24
  Speaker 1: back on track. For Bloomberg News, I'm Shanda. There's a
• 14:33
  Speaker 1: famous UK newspaper headline which is supposed to have run
• 14:36
  Speaker 1: in the nineteen fifties, heavy fog in the Channel Continent
• 14:40
  Speaker 1: cut off. Whether or not it was actually published, it's
• 14:44
  Speaker 1: been used many times over the years to symbolize the
• 14:46
  Speaker 1: UK's somewhat distorted view of Europe, and I thought of
• 14:50
  Speaker 1: it again just before Christmas, when fear of the news
• 14:54
  Speaker 1: strain of COVID nineteen sweeping across England prompted France to
• 14:58
  Speaker 1: block all traffic from the UK for forty eight hours,
• 15:01
  Speaker 1: just days before Britain cut itself off from the main
• 15:05
  Speaker 1: economic arrangements underpinning the European Union. Lizzie Burden, our UK
• 15:10
  Speaker 1: economy reporter, went to Dover to see the chaos for herself. Confusion,
• 15:28
  Speaker 1: desperation and frustration. Those were the sounds of angry truckers
• 15:33
  Speaker 1: clashing with police at a roundabout near Dover, Britain's busiest poet.
• 15:38
  Speaker 1: There were two arrests outside the disused airfield where drivers
• 15:42
  Speaker 1: were sent for a COVID test, which would be their
• 15:45
  Speaker 1: ticket across the French border into mainland Europe. They had
• 15:49
  Speaker 1: been stuck after a forty eight hour blockade imposed after
• 15:53
  Speaker 1: a new strain of the virus was found in the UK.
• 15:56
  Speaker 1: Tensions had mounted as thousands of Hawley as you on
• 16:00
  Speaker 1: the M twenty the highway over from where ferries crossed
• 16:04
  Speaker 1: to the French port of Calais. A stroll down the
• 16:07
  Speaker 1: Central Reserve revealed license plate after license plate on vehicles
• 16:12
  Speaker 1: from Poland, Romania, Hungary, almost none from the UK. Behind
• 16:18
  Speaker 1: the wheels were men craving home comforts in time for
• 16:21
  Speaker 1: the holidays, especially clean toilets. I spoke to some of
• 16:26
  Speaker 1: the drivers on December twenty three. We are wading now
• 16:30
  Speaker 1: more than forty eight dollars. So where did you start
• 16:33
  Speaker 1: and where are you going? Manchester? Yes, but I got
• 16:37
  Speaker 1: to Germany and where are you from from? Shop? Okay?
• 16:41
  Speaker 1: What's in Van? I have biscuits? Is there a roof?
• 16:45
  Speaker 1: Of course, it's food. I came here, O Lord Lord
• 16:49
  Speaker 1: and God, big men. I can't they close the borders
• 16:53
  Speaker 1: the conditions. Have you had food? Yes? On the airport
• 16:57
  Speaker 1: they give yours half water number one bread. But I
• 17:02
  Speaker 1: don't need the poll. I want to go home Christmas,
• 17:06
  Speaker 1: you understand, and now I can't make it. Don't have
• 17:09
  Speaker 1: Christmas in I don't know it. Do you have children
• 17:11
  Speaker 1: waiting for you? One from a six years old and
• 17:14
  Speaker 1: one is three and they are crying at home? Are
• 17:18
  Speaker 1: you waiting for us? But what can we do? And
• 17:20
  Speaker 1: are you worried about coronavirus? Yes? I know you can
• 17:24
  Speaker 1: no job with that, but we are drug divers. We
• 17:27
  Speaker 1: don't ever gontact with anybody. As testing gathered paste, the
• 17:31
  Speaker 1: backlog was cleared. A Brexit trade deal, aimed at avoiding
• 17:35
  Speaker 1: exactly this type of chaos at the border was signed
• 17:38
  Speaker 1: on Christmas Eve and by eleven pm on New Year's Eve,
• 17:42
  Speaker 1: when the UK left the European Unions, Single Market and
• 17:45
  Speaker 1: Customs Union, it was eerily quiet at Dover. Yet there
• 17:50
  Speaker 1: are still signs that the double wammy of Brexit and
• 17:53
  Speaker 1: COVID could take their toll on trade. Real time data
• 17:57
  Speaker 1: shows the rate of freight firms reject in contracts to
• 18:01
  Speaker 1: take cargo from France into the UK tripled from the
• 18:04
  Speaker 1: third quarter. Shane Brennan is the chief executive of the
• 18:09
  Speaker 1: Cold Chain Federation, which represents businesses along the food supply
• 18:13
  Speaker 1: chain in the UK. I asked him whether no queues
• 18:17
  Speaker 1: were good news and what all this means for supermarkets.
• 18:22
  Speaker 1: I don't think we can tell anything from the trade
• 18:24
  Speaker 1: that we've experienced so far. Trade on New Year's Day
• 18:26
  Speaker 1: was sort of ten percent of what it would be
• 18:28
  Speaker 1: on a normal trading day. Most of the members I've
• 18:30
  Speaker 1: spoken to of the last forty eight hours have not
• 18:32
  Speaker 1: tried to send a vehicle through the border yet, and
• 18:35
  Speaker 1: most of them are looking at sending stuff starting on
• 18:37
  Speaker 1: so Thursday or Friday of this week. Certain times of
• 18:40
  Speaker 1: fresh foot and vegetables do rely on coming into the
• 18:42
  Speaker 1: country just in time, so there could be a situation
• 18:44
  Speaker 1: where they're in short supply in the coming weeks. There is, however,
• 18:48
  Speaker 1: another dynamic here, which is we're going into a COVID lockdown,
• 18:51
  Speaker 1: so normal trade flows will be distorted by that, and
• 18:53
  Speaker 1: that'll be more an important factor than the actual Brexit
• 18:57
  Speaker 1: distortions in trade volumes and trade for requirements in the
• 19:00
  Speaker 1: coming days and weeks. So it could be that actually
• 19:04
  Speaker 1: the Brexit disruption is masked by that bigger COVID disruption
• 19:10
  Speaker 1: the most Britain's the main question is when things will
• 19:13
  Speaker 1: get back to normal. It will take us through to
• 19:15
  Speaker 1: the spring before we can have any confidence of what
• 19:18
  Speaker 1: normal now looks like because of the lots of paperwork
• 19:20
  Speaker 1: requirements are going to be trial and error for some
• 19:22
  Speaker 1: weeks yet. And just because they are moving smoothly today
• 19:25
  Speaker 1: does not mean they'll be moving smoothly tomorrow. That's just
• 19:28
  Speaker 1: the reality of it, and we're going to have to
• 19:30
  Speaker 1: just strap in for the ride. Well, our senior UK
• 19:42
  Speaker 1: economist Dan Hansen is here to take stock of what
• 19:45
  Speaker 1: Brexit and now this very serious intensification of the pandemic
• 19:50
  Speaker 1: means for the UK economy. Dan breaks it first, we
• 19:55
  Speaker 1: did have those real worries going into the new year
• 20:00
  Speaker 1: about not having a deal and having further chaos on
• 20:04
  Speaker 1: the borders. Um, we've we've dodged that bullet, but we
• 20:09
  Speaker 1: still don't really have complete clarity on what a burden
• 20:12
  Speaker 1: is this going to be on businesses going forward? How
• 20:14
  Speaker 1: is it looking for you? Yeah, it's really difficult to know.
• 20:18
  Speaker 1: I mean, as you say, the avoiding the no deal
• 20:21
  Speaker 1: was was really good news and that was sort of
• 20:23
  Speaker 1: a nice, nice Christmas present for us all. But to
• 20:26
  Speaker 1: be honest, the what we've seen so far at least
• 20:30
  Speaker 1: is that the disruption hasn't hasn't really been there. These
• 20:33
  Speaker 1: big queues at the at Dover and in Calais, they
• 20:37
  Speaker 1: they haven't come, they haven't come to pass yet. And
• 20:40
  Speaker 1: I mean in terms of the economic impact in the
• 20:42
  Speaker 1: first quarter, it's extremely difficult to calibrate this sort of shock.
• 20:46
  Speaker 1: I mean, one thing we've we've drawn on is what
• 20:49
  Speaker 1: the Bank of England have done. They said back in
• 20:51
  Speaker 1: November that disruption could knock about a percentage point of
• 20:54
  Speaker 1: gross in the first quarter of the year. Now, as
• 20:58
  Speaker 1: I say, given what we see, that sounds like it
• 21:01
  Speaker 1: might potentially be too much. And disruption, you you would
• 21:05
  Speaker 1: hope if it was going to happen, it would happen
• 21:07
  Speaker 1: in the first quarter and then dissipate as firms got
• 21:10
  Speaker 1: used to the new trading arrangements. But the broader point
• 21:13
  Speaker 1: with Brexit, and I think it's this is where it's
• 21:15
  Speaker 1: really different from COVID, is that it's a slow burn shock.
• 21:18
  Speaker 1: It's not this big sharp shock that happens as we've
• 21:21
  Speaker 1: as we've seen with COVID and numerous occasions over the
• 21:24
  Speaker 1: past twelve months, it's this slow burn and that drag
• 21:27
  Speaker 1: on from lower trade flows and also from lower migration
• 21:30
  Speaker 1: flows as well, because of the tighter migration regime. We
• 21:34
  Speaker 1: will drag the economy's potential growth rate down. Yes, and
• 21:38
  Speaker 1: I think, I mean it's going to be it's also
• 21:40
  Speaker 1: journalistically going to be a challenge just to keep tabs
• 21:43
  Speaker 1: on those, as you say, really micro changes that will
• 21:46
  Speaker 1: unfold over time. Bloomberg's obviously been doing a lot of that.
• 21:50
  Speaker 1: And also I remember there was an extremely good Financial
• 21:53
  Speaker 1: Times piece actually over Christmas just talking about one sector
• 21:57
  Speaker 1: of the wine industry and how if you have extremely
• 22:01
  Speaker 1: valuable wine, you're now going to, in theory, have to
• 22:04
  Speaker 1: open one of the bottles in order to establish exactly
• 22:07
  Speaker 1: the chemical breakdown of the contents to meet the requirements
• 22:11
  Speaker 1: of of going into Europe, which, of course, if you've
• 22:13
  Speaker 1: got a bottle of wine that's worth seventy pounds, you
• 22:15
  Speaker 1: really don't want to do. So I think it's it's
• 22:18
  Speaker 1: those little things that perhaps we won't as you say,
• 22:22
  Speaker 1: we won't know enough about for quite for quite some time,
• 22:26
  Speaker 1: quite big things have happened. Even since the first of January.
• 22:29
  Speaker 1: We've now gone into this third made national lockdown in
• 22:33
  Speaker 1: the UK in response to what looks like an extremely
• 22:37
  Speaker 1: grave situation that the National Health Service is facing with
• 22:42
  Speaker 1: this uconormous jump in COVID cases. How has that changed
• 22:47
  Speaker 1: your outlook for the UK economy over the next few months. UM.
• 22:52
  Speaker 1: We think the economy will contracts by four and a
• 22:54
  Speaker 1: half percent in the first quarter UM and that compares
• 22:58
  Speaker 1: to a fall of about one percent in the fourth quarter.
• 23:01
  Speaker 1: And a big reason why we think the contraction will
• 23:04
  Speaker 1: be bigger this quarter than it was at the end
• 23:07
  Speaker 1: of last year was because I should say, the schools
• 23:10
  Speaker 1: have closed, and that's likely to have a greater economic impact,
• 23:14
  Speaker 1: not only through the direct impact on GDP from through
• 23:18
  Speaker 1: education output. Fewer fewer children in schools will just reduce
• 23:23
  Speaker 1: the education output directly, but also has a labor supply impact,
• 23:26
  Speaker 1: so parents will have to stay at home look after
• 23:29
  Speaker 1: their children, and that obviously impacts the economy as well.
• 23:33
  Speaker 1: If schools haven't been closed, we would have expected a
• 23:35
  Speaker 1: falling output in the first quarter of two percent. We're
• 23:39
  Speaker 1: saying the output will four by four and a half percent.
• 23:42
  Speaker 1: Obviously there's supposed to be a difference in this lockdown
• 23:44
  Speaker 1: is that it really is supposed to be the last one,
• 23:46
  Speaker 1: because we have in theory and end in sight not
• 23:51
  Speaker 1: so long away, with potentially a large proportion of the
• 23:56
  Speaker 1: vulnerable population vaccinated within a month or two. How dependent
• 24:02
  Speaker 1: is the economy now on that rapid rollout of the
• 24:04
  Speaker 1: vaccines and how much can we really believe the government
• 24:07
  Speaker 1: in the in the promises, in the promises for for
• 24:10
  Speaker 1: how many people will be vaccinated so quickly. I mean
• 24:13
  Speaker 1: it's entirely dependent. I mean Boris has linked the the
• 24:19
  Speaker 1: ending of the lockdown or the easing of the lockdown
• 24:21
  Speaker 1: to the rollout of the vaccine and the government being
• 24:24
  Speaker 1: successful at getting those two million shots a week in
• 24:27
  Speaker 1: people's arms. So if if that fall short of their
• 24:32
  Speaker 1: they're very high, very very high expectation, then the lockdown
• 24:36
  Speaker 1: is going to last longer, and I think there is
• 24:39
  Speaker 1: a big risk of that. And there are a few
• 24:42
  Speaker 1: other things as well there. I think the fact that
• 24:45
  Speaker 1: this version of the virus is more transmission transmissible, that
• 24:49
  Speaker 1: creates a risk that the lockdown needs to be tightened
• 24:52
  Speaker 1: further to ensure that the infection rates come down. We
• 24:57
  Speaker 1: have often been thinking about the UK where it ranks.
• 25:02
  Speaker 1: The Prime ministers often talking about us being well beating
• 25:04
  Speaker 1: in there, since we certainly we seem to be word
• 25:06
  Speaker 1: beating in in our ability to develop new strains of
• 25:08
  Speaker 1: the virus and our ability to catch it. But I
• 25:12
  Speaker 1: did notice that your forecasts was showing the UK UK
• 25:16
  Speaker 1: actually potentially growing faster than many other countries this year,
• 25:20
  Speaker 1: having done worse than other advanced economies last year. You
• 25:25
  Speaker 1: might have thought, with the faster, much faster pace of
• 25:28
  Speaker 1: vaccine rollout than on the continent where it's been quite slow,
• 25:33
  Speaker 1: that that forecast was looking okay. But given what's happened now,
• 25:37
  Speaker 1: do you think that the UK will still look quite
• 25:40
  Speaker 1: economically weak relative to its partners at the end of
• 25:43
  Speaker 1: this year. Well, it's a story of two corner football phrase,
• 25:48
  Speaker 1: it's a story of two halves. I think you've got
• 25:50
  Speaker 1: You've got this this initial period at the start of
• 25:54
  Speaker 1: this year, and it's not really the half I see.
• 25:55
  Speaker 1: It's probably up to spring into early summer, where it's
• 25:59
  Speaker 1: going to be very difficult for the economy. But I
• 26:01
  Speaker 1: still don't think that precludes the economy benefiting a lot
• 26:05
  Speaker 1: once the vaccine does come online. Obviously there's a lot
• 26:08
  Speaker 1: of uncertainty about when that that will be the that
• 26:10
  Speaker 1: will happen. But in the second half of the year
• 26:12
  Speaker 1: we've got we've got a pretty strong bounce back and
• 26:15
  Speaker 1: the economy picking up. I mean, if you look at
• 26:18
  Speaker 1: annual growth rates, just to just to say it's that
• 26:21
  Speaker 1: the week starts the year will mean the growth rate
• 26:24
  Speaker 1: is lowered quite a lot. The annual growth rate looks
• 26:26
  Speaker 1: a lot weaker, but actually that means a lot of
• 26:28
  Speaker 1: it is pushed into twenty two. So if you look
• 26:30
  Speaker 1: at our numbers, you're looking instead of looking at about
• 26:33
  Speaker 1: a six percent growth rate in one, you're now looking
• 26:37
  Speaker 1: at something closer to four percent. But then you shift
• 26:40
  Speaker 1: into twenty two and you've got something closer to seven
• 26:43
  Speaker 1: and a half percent instead of something around five and
• 26:46
  Speaker 1: a half six percent. Obviously, all of that assumes that
• 26:50
  Speaker 1: there's isn't much scarring from all of this, that the
• 26:52
  Speaker 1: economy can in fact bounce back, that fiscal policy does
• 26:56
  Speaker 1: come in and protecting comes and ensure that unemployment doesn't
• 27:00
  Speaker 1: spike and the firms don't go bankrupt. And of course
• 27:03
  Speaker 1: the big risk is the more of these lockdowns you have,
• 27:06
  Speaker 1: the bigger risk that scarring does occur, and the bankruptcies
• 27:09
  Speaker 1: do occur, and the economy does struggle then to bounce.
• 27:12
  Speaker 1: But as things stand, we do think the second half
• 27:15
  Speaker 1: of the year will be a lot better than the first.
• 27:16
  Speaker 1: Dan Hanson, thank you so much. I think we'll probably
• 27:19
  Speaker 1: in a few months time, when a lot of that
• 27:20
  Speaker 1: fiscal support is about to evaporate and we are hopefully
• 27:23
  Speaker 1: looking at a rapid recovery. I'm sure we'll come back
• 27:26
  Speaker 1: to check in with you. But thanks again, thank you
• 27:29
  Speaker 1: very much. Thanks thanks for listening to Stephanomics. We'll be
• 27:41
  Speaker 1: back next week with more on all things economic, and
• 27:44
  Speaker 1: remember you can always find us on the Bloomberg terminal, website,
• 27:47
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• 27:49
  Speaker 1: get more news and analysis from Bloomberg Economics by following
• 27:53
  Speaker 1: at Economics on Twitter. This episode is produced by Magnus Hendrickson,
• 27:58
  Speaker 1: with special thanks to Mike sas, Sean Donnan, Lizzie Burden,
• 28:02
  Speaker 1: and Dan Hansen. Lucy Meekin is the executive producer of
• 28:05
  Speaker 1: Stephanomics and the head of Bloomberg Podcast is Francesco Levy.
• 28:11
  Speaker 1: M