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Could Huge British and American Stimulus Packages Help the Financial Markets?

It is hoped that the massive $2 trillion package put together by the North American government will help financial markets around the world to get through this incredibly difficult period. This initiative follows on from similar plans in the UK.

What Is the American Plan?

President Donald Trump has repeated his desire to get the country open for business again by 12th of April. However, it is expected that figures due out soon will reveal that a record-breaking number of Americans have lost their job this month, with up to 4 million people becoming jobless in one week.

To help the country get through the coronavirus impact, the Senate passed the emergency aid proposal by 96-0. Majority Leader Mitch McConnell called it a "wartime level of investment into our nation”.

The money will be given to individuals and to businesses in various different situations. For example, tax-payers across the country will each get a cheque for as much as $1,200. Many people have lost their jobs as consumers stop spending money.

Small businesses can access $350 billion in loans. It is expected that those that don’t let go of staff won’t need to pay the money back.

Help for the Self-Employed in the UK

The British government has launched several aid packages aimed at helping businesses and individuals to cope with the financial impact of the current health crisis. Despite this, it is believed that numerous businesses will need to turn to international debt recovery and other ideas.

The latest move they have made is to give self-employed workers a helping hand. Chancellor Rishi Sunak is expected to unveil plans similar to the 80% wage subsidies for employees that he revealed last week. The chancellor has admitted that helping self-employed workers is something that is "incredibly complicated".

It is thought that finding a way to pay a decent sum to the self-employed people who most need it has proved to be a huge task. However, Boris Johnson told MPs that they will “do whatever we can” to help these workers to avoid major financial issues until things return to normal across the UK.

At the time of writing, the Bank of England has just announced that interest rates will stay unchanged at 0.1%. This follows two emergency cuts in the last few weeks, taking the rate down from 0.75% to its current level.

How Have the Markets Reacted?

The financial markets have been incredibly volatile in the last week, as investors have reacted to each new piece of news that has come out. Today, the upcoming US jobless figures news has caused another huge fall in the FTSE, to around 5551.

Weak British retail numbers from February – before the coronavirus outbreak had caused any major impact – also caused shares to fall. Retail sales dropped by 0.3% in February and will be far worse in March.

However, the middle of the week included two consecutive days of share price increase. This saw the FTSE 100 gain £113 billion in its second-best day ever, while Wall Street had its best day in close to a century.