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A Storm Ahead #opinion

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As Britons are hiding away in our impenetrable fortresses, sleeping on a bed of toilet paper and hoarding the last packet of Wotsits, waiting for the China virus to magically pass us by unscathed - there is an impending crisis that may pose a greater risk to the general public. As we all clap the heroic work of the NHS staff during these dangerous times, we must also consider the impact of those unable to return to their "non-essential" jobs.

To keep afloat with no direct income, the UK government offer income support to idle-thumbed workers as part of a £30bn care package to tackle the affects of the virus. The Bank of England was already predicting a massive economic slowdown back in February, with every day the UK remains under lock down meaning little to no income through taxation and mounting costs. It's quite likely that our children may still be paying off the debt this crisis racks up.

The grass is looking decidedly not so green on the other side, as the EU tackles both the virus and potential economic collapse. As the German finance minister of Hesse demonstrated so well when he recently committed suicide in response to making financial predictions, we are in quite some trouble. This arrives at a time when the rich and poor member states of the EU are struggling to confirm the budget for the next six years, with Brexit leaving a £58bn hole that Germany and France may be left holding the bill for.

Economic experts are already comparing the affects of the coronavirus with the 2008 financial crisis, speculating that markets are behaving so erratically due to the uncertainty in the markets. Whilst the virus is not yet as bad as the crunch in 2008, there are factors that point towards a much worse outcome with the aviation industry collapsing, oil industry under pressure from multiple fronts, the housing sector rocked to its foundation and the global economy rapidly contracting.

On a seemingly unrelated note, it's been long asserted that the economic numbers reported by Beijing are simply made up, with a very large debt and housing bubble indicating China to be on the brink of collapse prior to the virus. That factories in China are still failing to reach positive levels of production and the situation there will likely worsen. The fact that they are shipping faulty medical supplies around the world may be an indicator that their factories simply don't have enough bodies or experts back at work - even for essential production.

Why should we care about China? Well, you may have noticed that the recovery from the 2008 financial crisis happened surprisingly fast, the reason for this being that a lot of the debt was purchased in return for higher interest rates and the promise of paying back the debt slower. Given the West was on its knees, who purchased the debt? Other than wealthy private companies, it turns out that China was a large investor in Western debt.

If the Chinese economy collapses as is predicted, it's likely that a large amount of debt from the 2008 financial crisis will come back to bite us all, with the added financial pain created by the virus could generate a recession like nothing ever seen before. A large storm is brewing and it's unclear what we can do other than to stay indoors.