More market warnings of recession and slowdowns.

The UK 10 year state borrowing rate fell to 0.43% today. Meanwhile the German share index was one of the worst performers, falling another 4.6% as some in the markets pencilled in a German recession.

Still no new economic actions  from western governments or Central Banks.

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43 Comments

  1. Matt
    Posted February 28, 2020 at 3:14 pm | Permalink

    Why not quarantine only the vulnerable ? Those young with known lung disorders and the elderly.

    The rest of us must sweat it out. One thing’s for sure – the economic fallout from the hysteria could kill more than the flu itself.

    And Greta Doomgoblin ? Barely a town square of kids taking part in the Great British Bunk Off and it’s wall to wall BBC “We must close down the UK economy.” And of course they choose a school day to do this rather than a Saturday to go out on a clean up.

    Have a look at the litter. It’s quite clear what stop-the-economy generation is dropping it and also that a favourite kid’s burger chain is well over represented in the detritus. Not loving it.

    (Do we really think a bunch of young people too lazy to get out of their car to buy their Big **** and fries are going to bother looking for a bin ? This organisation needs a special litter tax imposed on it – it’s crap ranges miles from its outlets.)

    • Lifelogic
      Posted February 28, 2020 at 8:38 pm | Permalink

      Indeed the virus is out of the box, nothing much we can do about it. Quarantining the vulnerable is exactly the right way to go from this position. Indeed is is perhaps the only senible way to go.

    • jerry
      Posted February 29, 2020 at 10:02 am | Permalink

      @Matt; “Have a look at the litter. It’s quite clear what stop-the-economy generation is dropping it and also that a favourite kid’s burger chain is well over represented in the detritus. “

      Perhaps we just need LAs to provide more waste bins, and to empty then on a daily bases. Funny how other courtesies manage to provide such simple litter defeating technology, as was common here in the UK, before tax cutting became more important than a functioning ‘society’, back in the 1960s and ’70s it almost seemed like there was a waste bin on ever street corner, these days (in the era of the personal mobile phone) you’re more likely to see a public payphone box than a waste bin!…

      Perhaps the Chancellor could alter the tax rate on fast-food, make it cheaper to eat-in than take-out?

      • czerwonadupa
        Posted March 3, 2020 at 11:46 am | Permalink

        Many of the litter bins were removed because of Irish “terrorism”, especially on stations. Now if you see them they are hanging transparent plastic bags were they can see the contents.

  2. villaking
    Posted February 28, 2020 at 3:36 pm | Permalink

    Sir John,
    Patience please! We can not expect instant knee-jerk responses to the very recent coronavirus outbreak. I expect in the light of recent developments we will see something from the BoE at the next MPC meeting and a giveaway budget from Rishi Sunak on March 11th.

    • formula57
      Posted February 29, 2020 at 3:19 am | Permalink

      “Recent” does not sit well in the context of a pandemic that began three months ago and progress of which is at an exponential rate, now affecting at least 69 countries and quite likely to infect 40 – 70 per cent. or more of humanity in the short run.

      Responses, measured and appropriate (devised surely during past contingency planning) are urgently needed. Awaiting the Ides of March looks unnecessarily late.

  3. Martin in Cardiff
    Posted February 28, 2020 at 3:45 pm | Permalink

    With the entire customer base in some sectors and parts of the globe expected to self-isolate, it’s hardly surprising, is it, John?

  4. glen cullen
    Posted February 28, 2020 at 4:01 pm | Permalink

    Best we leave the EU immediately and start trading under WTO, least we get dragged under by European recession. We maybe financially liable to the ECB and other EU institutions while still in the transition period

  5. Lifelogic
    Posted February 28, 2020 at 4:17 pm | Permalink

    Indeed the solutions are perfectly clear and certainly should not include cancelling Heathrow or other airport expansions, subsidising expensing renewable energy or building expensive white elephants like HS2, taxing and regulating the wealth creating sector to death or listening to daft new religions like the Saint Greta Thunberg one.

  6. Lifelogic
    Posted February 28, 2020 at 4:29 pm | Permalink

    Jeremy Hunt (PPE) thinks that – most people will think the mortality rate of 1-3% is quite low! Well no one that I know thinks that a 3% or 1 in 33 chance of death (should you catch the virus) is quite low. It is getting fairly close to Russian roulette chances.

    This especially if say 20 million just in the UK manage catch it.

    Perhaps he mixes with rather odd and innumerate people.

    • Lifelogic
      Posted February 28, 2020 at 5:16 pm | Permalink

      The government’s worst case scenario is that 70% of the population are affected by the virus , but Jeremy Hunt pointed out that “China have got on top of it with less than 5% getting it”. Surely even Hunt cannot believe china are on top of it yet can he?

      He said he had confidence in the NHS dealing with the issue, adding: “If I were going to choose a country in the world to be in when there is a pandemic, I would choose the UK because the NHS is very, very good at preparing for these situations.”

      Unlikely as they are so poor at almost everything else they do and hugely over stretched already.

      • Martin in Cardiff
        Posted February 29, 2020 at 11:28 am | Permalink

        Maybe the Chinese are not as they say, but they were as good as their word on SARS.

        We will see anyway.

  7. Ian Wragg
    Posted February 28, 2020 at 5:10 pm | Permalink

    There doesn’t seem to be any acknowledgement yet that the UK is leaving the EU. The BoE will no doubt act too little too late.
    Again I say that the green blob must be ecstatic that the world is going into recession, it fits nicely in with their desires.
    St Greta of Thunberg will be pleased that CO2 emissions are reducing never mind the poverty it causes.

  8. acorn
    Posted February 28, 2020 at 5:30 pm | Permalink

    With the current state of the planet, can you blame numerous non-government sectors buying their government’s risk-free savings certificates (Gilts Bonds etc); forcing up the price; hence, forcing down the yield to redemption?

    There is a strong chance this virus thing will force a global stop to globalisation and a reversion to territorialism. That is, if we don’t make grow or mine it in our own currency territory, we will do without it. Bad news for countries like the UK, that depend on high levels of imports for their standard of living. At times like this, belonging to a large single market / customs union, would be a significant advantage.

  9. Garland
    Posted February 28, 2020 at 6:09 pm | Permalink

    What you talking about? looks to me like the whole world has gone into a downward spiral and nobody knows how this is going to end up. Just as we’re cutting ourselves off from the largest trading bloc on the planet the war in Syria is heating up and here we are again discussing Market Warnings- well am afraid it’s too late for that now.

    • jerry
      Posted February 28, 2020 at 8:29 pm | Permalink

      @Garland; “Just as we’re cutting ourselves off from the largest trading bloc on the planet”

      What are you talking about, the UK has simply left the political European Union, not moved to Mars! The largest trading block is actually the RotW but even if accept your idea that it is the EU (and mere 27 countries) we are still trading with the EU, just not taking their laws and regulations as our own…

      • margaret howard
        Posted February 28, 2020 at 11:36 pm | Permalink

        jerry

        It’s those laws and regulations that have made the EU the world’s wealthiest and most influential trading bloc.

        The regulations ensure that only the highest standards are acceptable and that its products can be bought with confidence, not as those of China for example which has earned it the reputation of Buy Chinese Buy Twice.

        Cut corners and the world will stop buying. Ditto if you get a reputation for unfair trading and dealing.

        • Edward2
          Posted February 29, 2020 at 7:56 am | Permalink

          Strange logic from you Margaret.
          I bet the majority of goods in your home come from outside the EU.
          And you fail to realise how many different product standards there are in Europe.

          The UK exports to nearly every country in the world.
          The producers of those goods have to meet the requirements of those markets.
          We have been doing that for decades.
          Customers in the UK and in export marketsdo not want reduced standards or poor quality and they will quickly switch to the many alternatives offered by other countries.

          • margaret howard
            Posted February 29, 2020 at 4:54 pm | Permalink

            Edward2

            “The producers of those goods have to meet the requirements of those markets.
            We have been doing that for decades.”

            Since 1973?

          • Edward2
            Posted February 29, 2020 at 8:24 pm | Permalink

            Yes of course.
            You cannot sell into an export market unless you meet the customer requirements and the regulatory requirements of that market.
            Things have changed since the seventies (for the better) but the same rule still applies.

          • jerry
            Posted February 29, 2020 at 8:34 pm | Permalink

            @margaret howard; Yes, since well before 1973. Next…

        • APL
          Posted February 29, 2020 at 8:25 am | Permalink

          “It’s those laws and regulations that have made the EU the world’s wealthiest and most influential trading bloc.”

          You keep repeating this incorrect and misleading statement.

          It’s wrong because the countries that comprise the EU were affluent before the EU came into existence.

          It’s false because the United States of America is the worlds wealthiest and most influential trading bloc. Some $3tn larger than the EU.

          It may after a series of left leaning Presidents and tax and spend Socialist policies and ballooning debt, open door immigration be in a bit of a pickle. But all the deficits of the US can equally be applied to the EU, probably moreso.

          Internal trade between the several states of the United States is greater than the European Union.

        • jerry
          Posted February 29, 2020 at 8:51 am | Permalink

          @margaret howard; You seem to be conflating two issues here, the freedom to trade and local standards. A motor car made to comply with the UK’s C&U standards will be the same where ever it is built, Oxford, Stuttgart, Nanjing, or Detroit. Same with household white goods, faulty switches aside, same with consumer electronics, same with pharmaceuticals etc.

          “The regulations ensure that only the highest standards are acceptable and that its products can be bought with confidence”

          Except some countries have higher standards than the EU, but even those products can not be (easily) sold within the EU single market area.

          Post Brexit people should be allowed to buy perfectly safe products produced in (say) the USA which are currently banned, or face high tariffs, here in the UK due to EU protectionism masquerading as “standards”.

          <i."[the world will stop buying] if you get a reputation for unfair trading and dealing."

          That might explain many of the EU27 economic woes…

        • Alan Jutson
          Posted February 29, 2020 at 9:47 am | Permalink

          Margaret Howard.

          Oh dear, if the EU is so wonderful why are an increasing number of people who are living in it, and with it, becoming disillusioned, or are they all just dim !

          Eventually time will tell who is right, and who is deluded, just wait and see, and if you do not like what our government is doing, then simply vote for someone else at the next election.

          Simples.

          • margaret howard
            Posted February 29, 2020 at 4:51 pm | Permalink

            Alan Jutson

            ” if you do not like what our government is doing, then simply vote for someone else at the next election”

            Well, I seem to be in good company as the head of our civil servants Sir Philip Rutnam has just announced not only that he is resigning but also that he is suing the government for unfair dismissal.

            As for voting for someone else I wish that were possible under our ludicrous undemocratic system. I live in a constituency that has belonged to the Conservatives forever and will remain so indefinitely.

            My vote is totally worthless.

          • Edward2
            Posted February 29, 2020 at 8:27 pm | Permalink

            The voters in your area must be happy with their choice.
            But your vote is recorded and may encourage others.
            And I hope the majority government will think of all voters and their opinions because if they do not then failure will happen at the next election.
            It isn’t really a worthless vote.

          • jerry
            Posted February 29, 2020 at 8:53 pm | Permalink

            @margaret howard; “our ludicrous undemocratic system. I live in a constituency that has belonged to the Conservatives forever and will remain so indefinitely.”

            What utter nonsense! I live in a local authority area that had been Tory since its creation, not any more, enough local voters decided that they did not want a Tory run LA any more, we now have a LD controlled council – so much for a ludicrous undemocratic system.

            At the 2017 GE, the electorate in the Canterbury constituency decided to kick out the sitting Tory MP, electing the Labour party candidate, that seat had been Tory for the last 100 years at least – so much for a ludicrous undemocratic system.

            “My vote is totally worthless.”

            Well in a way it is, you decided to back the wrong horse – to mix my metaphors – most simply call it democracy, not an act of worthlessness…

        • czerwonadupa
          Posted March 3, 2020 at 11:53 am | Permalink

          And who was putting horse meat in tins & passing it off as beef? The Dutch
          And have you forgotten about Dieselgate? The Germans

  10. DOMINIC
    Posted February 28, 2020 at 7:27 pm | Permalink

    Current market swings are being driven by margin calls and distressed selling by highly leveraged investors responding to the State backed hysteria of the Corona-virus outbreak. There’s no systemic risk and I believe no indication that the market is pricing in any form of recession.

    It feels, once again, we are being played like rats in a political laboratory by central governments and political bodies

    • glen cullen
      Posted February 28, 2020 at 8:41 pm | Permalink

      agree with your assessment…it make sense

  11. Mike Wilson
    Posted February 28, 2020 at 7:35 pm | Permalink

    If the borrowing rate goes negative then, yes, Mr. Redwood, borrow trillions and make us all a fortune. Meanwhile, thankfully our government and the BOE mercifully do not share your obsession with generating growth by getting us all into even more debt.

  12. Mike Wilson
    Posted February 28, 2020 at 7:40 pm | Permalink

    If the UK government can borrow at 0.43% for 10 years why doesn’t it borrow a trillion or two and stick it in the bank at a fixed rate of 2%? Or bung it into Zopa and get 4% on it. What an earner!

    • Lifelogic
      Posted February 29, 2020 at 6:21 am | Permalink

      Better to get it through to small businesses many of whom have very sensible investments that could return well over 10% and at very low risk and these would create jobs and tax revenue too. But no they prefer to tip it down the drains on things like HS2, greencrap subsidies, worthless degrees, dithering over Heathrow for 20 years, bloated inept government, the dysfunctional NHS and the likes.

  13. Fred H
    Posted February 28, 2020 at 8:17 pm | Permalink

    OFF TOPIC.
    from BBC website.
    Greta Thunberg has warned “those in power” she will “not be silenced when the world is on fire”. The teenager was welcomed by chants of “Greta, Greta” as she addressed some 15,000 people at the Bristol Youth Strike 4 Climate (BYS4C) event.
    She accused politicians and the media of ignoring the climate emergency and “sweeping their mess under the rug”. “We are the change, and change is coming whether you like it or not,” the Swedish environmentalist said. Greta was speaking at the climate strike event on College Green, before leading a march through the city. “Activism works so I’m telling you to act,” she said. “We are being betrayed by those in power.”

    The sad deluded figure needs help, but should be stopped from using alarming language that might send vulnerable people to despair and top themselves. Also she is inciting the sort of action taken in Cambridge and should be arrested for it.

    • margaret howard
      Posted February 28, 2020 at 11:29 pm | Permalink

      Fred H

      Only arrested? She is lucky then that she lives in the 21st century rather than that other young girl 600 years ago who changed the then known world and threw the English out of France for good after she turned the tide in the Hundred Years War.

      But Joan of Arc suffered a more severe fate when she was burned at the stake at the age of 19 by our forefathers.

      The thing is though that she is remembered and revered after all those centuries while nobody knows the names of those who condemned her to death.

      • Fred H
        Posted February 29, 2020 at 8:29 am | Permalink

        MH – -You extolled the worship of your herione before. What do you think we should do about Greta’s rantings in public in the UK?

      • APL
        Posted February 29, 2020 at 8:44 am | Permalink

        margaret howard: ” the English out of France ”

        The French aristocracy, as we’ve been over once already.

        England is an occupied country and has been since 1066.
        Forced for three hundred years to use French as the official language.
        Unable to speak their own language in the official courts of their own country until 1362.

        margaret howard: “when she was burned at the stake at the age of 19 by our forefathers.”

        Yes Margaret, your forefathers.

        Howard: “English: from the Norman personal name Huard, Heward, composed of the Germanic elements hug ‘heart’, ‘mind’, ‘spirit’ + hard ‘hardy’, ‘brave’, ‘strong’. English: from the Anglo-Scandinavian personal name Haward, composed of the Old Norse elements há ‘high’ + varðr ‘guardian’, ‘warden’.

    • Lifelogic
      Posted February 29, 2020 at 6:17 am | Permalink

      Hugely cheered on by the BBC of course. She says we will not silence her. I have no wish to silence her, most religious figures invariably talk complete and utter drivel to their congregations and followers. But is might be nice if she studied a bit of physics and engineer and said something sensible just occasionally. She does not even offer or suggest any workable solutions and clearly does not have a clue what she is talking about.

      Would one fly on a plane designed by a child with no training or real understanding of science or engineering? So why would one trust her idiotic suggestions for energy and transport systems?

  14. Tabulazero
    Posted February 28, 2020 at 9:13 pm | Permalink

    There is little point for Central Banks to act before the pandemic hit the US. They are keeping their powder dry for the moment we pass peak hysteria.

  15. Chris S
    Posted February 29, 2020 at 3:14 am | Permalink

    What can the German government do to stimulate its economy and avoid a recession ?

    Secure their huge trade surplus with the UK for a start, by making sure that Barnier negotiates a proper trade deal with the UK. Then Merkel should relax her crippling public expenditure limits and carry out some much-needed infrastructure repairs :

    The German Autobahn network is in a parlous state with hundreds of worn out bridges subject to lane restrictions and speed limits as low as 20 kph. The slow lanes on most of the older two-lane autobahns invariably have two deep ruts caused by trucks constantly running nose to tail and need their foundations renewing, not just resurfacing. They are also overcrowded and should be widened at the same time to create more capacity. The Deutsche Bundesbahn has been starved of investment to the extent that reliability is poor and trains arrive on time a lot less frequently than they used too.

    Merkel hasn’t even authorised the money necessary to get Berlin’s shiny new, but unused airport opened. So serious are the design and construction errors that the airport is a world-wide laughing stock in the aviation industry.

    The German government runs such a vast current account surplus that it breaches EU rules but, of course, Brussels turns the other cheek as officials wouldn’t dare take Merkel to task over it.

    • bill brown
      Posted February 29, 2020 at 2:09 pm | Permalink

      Chris S

      Of course you are right lots of the EU governments should spend more, but where in the Eu des it say they are not allowed t have their surplus

    • margaret howard
      Posted March 1, 2020 at 8:30 am | Permalink

      Chris S

      “Merkel hasn’t even authorised the money necessary to get Berlin’s shiny new, but unused airport opened. So serious are the design and construction errors that the airport is a world-wide laughing stock in the aviation industry”

      A bit like our own dear old HS2 high speed rail link or Heathrow runway?

      • Edward2
        Posted March 1, 2020 at 11:54 am | Permalink

        Nothing like either of your examples.
        HS2 is funded by the government and is going ahead .
        Heathrow have the money to build a third runway but they are currently thwarted by a very odd judgement by the Appeal Court.
        This should be overruled by the Supreme Court otherwise every future infrastructure project could be halted on environmental impact grounds

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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