The City will guide the way for economic recovery
The latest assessment of leading economic organisations is stark – and grim. The head of the OECD, Angel Gurria, warned yesterday that the economic fallout from the coronavirus pandemic will result in a deeper and more complex hit to the world economy than the 2008 financial crisis.
He echoed the head of the IMF, Kristalina Georgieva, who also issued a warning over the scale of the financial impact and added a call for “bold fiscal actions” in response. Looking at the measures already undertaken by the UK government, and considering the additional policies that will become necessary to support jobs – especially self-employment – it’s hard to see quite where the IMF wants additional spending to come from.
The only silver cloud visible amid these miserable forecasts is that some (though not all) economists expect a sharper and more sustained return to growth than that seen in the decade following the financial crisis. Mervyn King, the former governor of the Bank of England, is among those clinging to the belief that the inevitable recession will be followed by an unusually swift uptick.
He said yesterday: “In order to deal with a health crisis, the government is deliberately pressing down on economic activity,” adding, “at some point there will be a rebound.” The IMF also expects a return to growth in 2021.
None of this will allay the fears of millions of people and thousands of businesses in this country who cannot yet see beyond the looming darkness, but when the light does start to break through it will be to the City of London that many will look for expertise, innovation, finance and growth capital.
As the City’s Lord Mayor said a week ago: “The City has come through difficult times in the past but there are good reasons for a quiet confidence.” In an uplifting joint statement with the Square Mile’s civic leadership, he pointed to the many inherent and hard-won advantages that London enjoys as a world leader in global finance.
As we report today, the City has cleaved out a leading role in the emerging and increasingly important field of green finance – and it still retains world-beating advantages through its dynamic capital markets infrastructure.
When the time comes to resume or rebuild commercial life in this country, the City of London will play a leading and essential role.