GDP figures around the world make grim reading and one of the few certainties of the pandemic is economic pain, leaving cities having the difficulty of cutting their cloth accordingly.
The new numbers are in and they continue to make for grim reading. Japan was the latest of the G7 nations to report their GDP figures this week and their economy, the world’s third largest, shrank by 7.8 per cent in the three months to the end of June.
The only crumb of comfort for Japan is its economy didn’t perform as badly as the United States and Germany, both down 10 per cent quarter on quarter, and the UK, nosediving an incredible 20.4 per cent.
Canada’s economy is expected to fall 12 per cent when it announces its GDP figures. Only China can be as happy as you can be given the circumstances with its economy returning to growth in Q2.
Covid-19 is rewriting the economic textbook and countries are desperate to try and revitalise flagging economies as much as they are fighting the virus. The United Nations warned in April that a sustained economic downturn could kill hundreds of thousands of children and plunge tens of millions more into extreme poverty. Former US president Bill Clinton’s adviser James Carville’s maxim that “it’s the economy, stupid” continues to ring as true now as it did in the early 1990s.
Here in the UK, August has seen the launch of ’Eat out to help out’, where you can buy a half price meal from any restaurant and the government will pick up the rest of the bill (you still have to tip though). It’s a smart policy, pushing people onto the high streets en route to eat and also refamiliarising them with being inside shops and cafes. In Germany, it looks like that its furlough scheme supporting those who have been put onto part-time hours to prop up businesses will be extended to 24 months.
All this comes at a cost. Literally. The 2010s was characterised by a public spending squeeze in light of the financial crisis. That happening again would be lunacy.
As you have no doubt read daily in our Covid Effect section, cities are using smart technology to help its citizens, whether it’s using data to run better transport networks or introducing cashless mobile ticketing. However, the GDP figures show that cities must get used to doing more with less and this will be one of their biggest challenges in the decade ahead.
What to prioritise? Using big data to track coronavirus outbreaks in a city’s sewer, like in Israel?
Broadening internet access, like in Chattanooga? Both are noble initiatives but which projects will be scaled back to pay for it? Smart buildings, given how home working could be the norm for some time? Perhaps, but then again getting people back into the workplace will boost the economy.
The problem with this crisis is we don’t know the solution, short of developing a vaccine. One of the few certainties we have is economic pain. Cities have the difficulty of cutting their cloth accordingly.