2020-2021 are the years that will leave a dark patch in the history of the world. Even world powers like China, the United States of America, and the United Kingdom were not able to escape from its web.
Right from 17th November 2019, when the world experienced its first novel coronavirus case, to today we are blind and unaware of the horrors curling behind the curtains. The horrors which will cease the world in a manner it had never experienced. The horrors which will spread like an ivy vine pushing every corner of the world into its trap.
Following are major events that turn the course of the destiny of all three powers.
The first in the pipeline we have is China, the most populous country in the world.
Evergrande crisis: Evergrande’s demise was precipitated by two swift reasons. Chinese officials are looking into property builders’ exorbitant borrowed funds as a component of a comprehensive onslaught on sectors like online business and academia. Evergrande sought to dispose of off most of its holdings to offset this.
A steady decline in China’s real estate market, as well as declining demand for new dwellings, impacted cash flows. Evergrande’s financial difficulties were influenced by a mixture of the two factors.
The company is currently saddled with a $300 billion debt load, lowering its creditworthiness and share value. There are around 800 unfinished residential constructions in the area.
Energy crunch: A power outage in China has spread from factory floors to households, putting a damper on the world’s second-largest economy’s development prospects. The shortages, which have been replicated in Europe and abroad, have also roiled commodities markets.
Part of the issue is that the recovery in the economy following the lifting of the lockdowns has raised demand, but decreased investment by miners and drillers has limited fossil fuel output. It’s also because of China’s green agenda. Primarily due to a lack of coal.
Coal-fired power plants generate more than 70% of the country’s electricity, but President Xi Jinping’s effort to decrease greenhouse gas emissions and become “carbon neutral” by 2060 has slowed coal mining. It has also caused a slowdown in the manufacturing sector, causing a slump in manufacturing.
What is happening in The United Kingdom?
Growing Inflation: In August, consumer prices rose 3.2 percent, much over the BOE’s 2 percent objective. The contributing central bank anticipates inflation to reach 4% before falling to the goal by year-end. In a recent study, consumers stated they expect inflation to rise, a notion the BOE must address to avoid increased costs flowing into wage demands.
Slow growth: The rate of growth is slowing. In July, Britain’s economic recovery slowed to its slowest pace since the start of the year, when the country was under lockdown. As lockdown regulations loosened, firms found hiring people to fill positions difficult, prompting them to raise salaries.
Supply-chain concerns have emptied store shelves and slowed economic growth. Infections of Covid-19 have grown to the point where the government has issued a warning about the possibility of stricter restrictions in the winter, dealing a blow to trust. As the BOE predicts, these concerns make it doubtful that the economy would grow at almost 3% in the third quarter. Tax revenues would be cut to the bone if growth slowed.
No government support: The government is slashing funding. The furlough scheme, which paid 80% of pay to employees whose companies were shuttered during lockdowns, will be phased out by the Treasury next week. As a result, 1.6 million people who are currently receiving the benefit will be forced to join the ranks of the unemployed.
Energy prices are rising, and Europe’s natural gas market is running out of supply as the winter season approaches. A fire shut down one of the main routes for electricity imports from France.
As a result, the wholesale price of electricity has more than quadrupled in the last three months, raising the expense of residential heating and industrial fuel requirements. Steel and fertilizer producers, particularly vulnerable to energy prices, have warned that they may have to reduce output. Utilities are increasing customer costs, which will contribute to inflation beginning in October and again in April when the regulator, Ofgem, examines rates.
There aren’t enough workers. The epidemic and Brexit depleted the labor pool that businesses require to expand. Following its exit from the European Union, Britain increased immigration hurdles, making it more difficult for millions to stay in the country.
At the same time, millions of people working in the hotel, transportation, and tourist industries, which were affected the hardest by the lockdown, searched for more secure positions.
As a result, the workforce is shrinking, putting upward pay pressure on workers. Business organizations are urging the government to relax immigration regulations to employ critical workers in industries like transportation and health care. According to ministers, companies should pay more for training for people who are still unemployed or on leave.
Is the miracle of the United States ending?
Economic suspension: The United States has been underfunding public health for decades, less damaging solutions like mass testing and contact tracing, proven successful in South Korea, were simply not accessible.
Reversing this trend will take a significant investment, but appropriately supporting public health must be the top priority when it comes to decreasing our vulnerability to pandemics.
Massive unemployment and homelessness: More than 22 million Americans have lost their jobs being hopeless. Thousands of individuals do not have a place to quarantine, much alone a bathroom, kitchen, or sink.
While people sleep on the pavements, there is no prospect of controlling coronavirus in the long run. Housing is critical to one’s health, and a firm housing policy will be a crucial component of any plan to decrease the United States’ vulnerability to the next pandemic.
We never know what the time holds. As the events which affect the economy somewhere affect us as well. Therefore we should never take life for granted and always be prepared for the worst.
