With coronavirus continuing to spread and no sign of restrictions being lifted, many are facing the prospect of unemployment and poverty.
But what will the long-term impact be?
Could this lead to a major economic crisis?
According to an Oxfam study, it could.
What does the report say?
According to the report, which was released by Oxfam today, “unless urgent and dramatic action is taken” over half a billion people could be pushed into poverty.
The report estimates that the pandemic could cause an increase of 400-600 million people in poverty globally. It also says the impact of the virus could damage the UN’s goal of ending poverty by 2030 – something that was backed by world leaders in 2015.
The UN has called for rescue packages to be put in place, especially for developing countries. This would provide up to $1 trillion in liquidity, $1 trillion in debt relief, and $500bn in aid to support health systems in struggling nations.
In addition, over 100 global companies have called for debt payments to be waived for developing countries for the rest of the year, giving more cash to support their economies.
It’s expected that debt relief and financial support will be on the agenda at the G20 video- conference meeting next week.
What does this mean for the EU?
Many European and North American countries have already announced financial aid programmes. These include help for individuals and businesses suffering the impact of lockdowns imposed due to the pandemic.
Oxfam supports an EU programme that shares risk and helps countries within the bloc to recover economically. Going forward, this could include cash payments to countries struggling because of the crisis.
This could help people, businesses, and the economies of countries affected to support workers incomes and prevent deflation.
To fund this, EU countries are being called on to agree to a solidarity wealth tax. Funds from this could then be coordinated so wealth is moved around as needed.
“An immediate suspension of the debt payments of poor countries, combined with a one-off economic stimulus by the IMF and an increase in aid and taxes, can pay for this,” said the report.
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