Section: CRUSU Comment

“T here are,” Mark Twain once remarked, “three kinds of lies: lies, damned lies, and statistics.” It’s certainly difficult to know what to make of economic statistics and indicators at the moment, in the world turned upside down that the Covid-19 pandemic has delivered. Here in the UK, we are told that April and May saw the national economy contract by 25%, the largest fall in 300 years of the Bank of England’s economic record keeping, and the situation is very similar across much of the developed world. But how real is that figure? After all, we were all sent home in March, to ‘lock down’ and prevent the spread of the virus, and we are only now starting to move back towards some semblance of normality. Some of us, fortunately or not, have still been able to work from home, but for much of the economy, especially for much of the service sector; tourism, travel, restaurants and hotels, theatres and cinemas – there has been zero activity. Remove half of the largest sector of the economy for three months and surely a 25% fall in output is exactly what you’d expect? But is that real, or just a number? Has that activity gone for good, or, now that we are emerging, blinking into the sunlight again, can we switch the economy back on again as easily as we switched it off?

Ordinarily I try to choose a different subject each issue for an editorial, but as April lengthens towards May, and here in the northern hemisphere we start to see the first signs of summer, there unfortunately remains only one subject that is obsessing every industry, and that is the Covid-19 pandemic and its impact upon every aspect of our lives. Since our last issue we have all had to come to terms with ‘lockdown’ and ‘social distancing’, as the grim toll of deaths climbs in all regions. Here at BCInsight we are working without an office as best we can, and issues of Sulphur will continue to land in your email inboxes, but paper copies of the magazines may take longer to arrive, if at all, as shipping and customs procedures are tightened all around the world, and I can only apologise and ask that you bear with us.

This year appears to be determined to illustrate the limitations of forecasting. Projecting trend lines into the future, looking at expected completion dates for major projects and global economic projections are all worthwhile activities, and can provide valuable insights for business people, but any prediction is apt to be derailed by what one of our prime ministers supposedly once described airily as; “events, dear boy, events.”

A New Year is typically a time for taking stock, for looking back at the year just gone, and thinking about the year to come. This year of course marks a bigger transition, from the 2010s to the 2020s. The past decade has been a volatile one, existing under the shadow of the global financial crisis of 2008-09, from which the world was still just emerging in 2010. Over the past decade, ‘quantitative easing’ has helped prevent deflation and driven a decade long stock market rally, but also kept both public and private debt levels high, as interest rates stay low. Weaning the global economy off QE has proved to be far more difficult than many anticipated.