The economy must reopen for business — now

The economy has taken on the character of a Thomas Hardy novel. We are aware something grim is coming, the only question is when. At some point, Sue Bridehead will go into the children’s bedroom, Tess will face the hangman and Wildeve and Eustacia will be taken by the depths of Shadwater Weir. At some point, too, the coronavirus economy will succumb with Hardy-esque inevitability to the tragedy of mass unemployment. 

There is an unspoken consensus that we should not talk about this for now. It is challenging enough to herd the population through the labyrinth of regulations and restrictions without telling them that the end point is likelier to be Universal Credit than a universal vaccine. Putting off the facts, however, does not change them. Bad times are coming and the country appears wholly unprepared for their impact. 

However else ministers have handled Covid-19, one example of smart and effective policy has been Chancellor Rishi Sunak’s Coronavirus Job Retention Scheme (CJRS). As of last month, 9.6million posts had been furloughed under the programme, which has meant the difference between dignity and the dole for families across the country and allowed small business owners to make it through the last seven gruelling months.

It may seem ironic that a Tory chancellor has given us all a lesson in the virtues of state interference in the market but in a time of acute crisis Sunak’s initiative has kept the UK economy afloat. 

The problem is that it cannot go on forever. Conservatives are fond of quoting the Margaret Thatcher aphorism that socialist governments ‘always run out of other people’s money’, but the same eventuality awaits any government that continues to spend while failing to grow (indeed, artificially depressing) the economy.

Sunak has pushed public sector net debt above £2trillion for the first time and into excess of GDP for the first time since 1961. Labour governments may run out of money but this Tory government will soon run out of IOU slips. 

When that happens, the UK will be confronted with social and economic straits most of us assumed had been relegated to the history books and old Pathe newsreel footage. Mass joblessness and bankruptcy or sequestration, the failure of thousands or more businesses, and knock-on effects including an eruption in homelessness, crime and physical and mental ill-health. Alarmist though it might sound, this is what happens when an economy collapses and government is no longer able or willing to prop it up. 

Nor would the fallout end in our pocketbooks and mortgage agreements. A return to 1930s-style unemployment could bring with it a revival of 1930s-style politics. That is why those who harbour an ideological objection to the CJRS (and even the more modest Job Support Scheme that will soon take its place) are dabbling in reckless fantasy of a kind that would devastate the lives and wellbeing of millions of families. Leave the performative libertarianism to Young Tory after-dinner speeches. 

Writing in the Mail last week, Dr Stuart McIntyre, head of research at the Fraser of Allander Institute, credited the CJRS with saving around 800,000 jobs in Scotland alone. He noted that it is ‘only as government financial support is phased out that the full effects of the pandemic on the jobs market crisis will start to hit home’.

The respected economist warned that steady unemployment figures were a product of the Treasury’s interventions and that the true costs of lockdown — already hinted at in a 49 per cent spike in redundancies and a 40 per cent plummet in vacancies UK-wide — would only become apparent after the Chancellor withdrew his fiscal life support. 

‘We must tackle the public health crisis with appropriate restrictions to contain the virus,’ Dr McIntyre cautioned. ‘But we must also act to combat the looming economic crisis.’

This is why it is vital that we begin to reopen the economy promptly. It will not be easy; public opinion is heavily on the side of caution. A Channel 4 poll published yesterday found 61 per cent of Britons support ‘circuit-breaker’ lockdowns and while 30 per cent cite their finances as the their biggest concern during the pandemic, twice as many say it is the risk to their health. Almost half want the government to spend more money saving jobs and businesses. 

The public can hardly be blamed for worrying when politicians and public health advisors have spent the seven months telling them to worry in daily TV adverts and social media warnings. There was and remains cause to be concerned but the authorities may have made the country too alert — that is, scared out of its wits.

Strong leadership and level-headed communication by the experts will be needed to coax people back out of this state of national fright. We cannot go on living our lives like Thomas Hardy’s wretched creations, caught up in the relentless march of fate, unable to direct our own lives and waiting for dread Providence to arrive at our door. 

The response to Covid-19 must be bifurcated into a health strategy and an economic strategy, neither of which should take priority over the other. The health strategy should be dedicated to suppression and eventual eradication of the virus while the economic plan directs its efforts to resuscitating the private sector.

In practice, this would mean managing the virus based on risk and demography, perhaps by applying lockdowns and other restrictions on the basis of individual factors (age, co-morbidities, household composition) rather than the current one-size-fits-all model. 

Younger, healthier people could be at greater liberty to work from the office, socialise and travel, while those in greater jeopardy from Covid continue to be kept safe. This would be a welcome development not only for the individuals in question but for sectors of the economy — including hospitality and tourism — which cannot sustain themselves through much more of the blanket approach. Those at the least risk from coronavirus would regain some, though not all, of their freedoms while businesses would regain some, though not all, of their customer base. 

By splitting health and economic wellbeing into two separate priorities, it would be easier to pursue each without feeling hindered by the other. We could continue to tackle coronavirus while ensuring we still have a dynamic economy for workers to return to once all are able. The inevitability of coming out of a pandemic and into an economic and social catastrophe would no longer seem quite so inevitable. 

*****

Good on ya, Jacinda Ardern. Over the weekend, New Zealand’s prime minister won a second, landslide term for her Labour Party. 

The 40-year-old has attracted admirers the world over for her focus on growing quality of life as much as the economy and for making a dent in New Zealand’s housing, child poverty and mental health problems. 

Although her ministry marked a break from her predecessor’s in terms of policy, she has striven to bring people together rather than sow division. She also appears to regard government as an opportunity to make people’s lives better rather than a mechanism for accruing power for herself. 

Surveying Ardern’s character and priorities, it’s hard not to acknowledge the parallels with a rather prominent woman in Scottish politics. Kezia Dugdale, a friend of the victorious Kiwi, was among the most talented politicians of her generation. Ardern’s success is her own, of course, but it feels like a glimpse of what could have been in Scotland had the lots fallen differently. 

*****

At least 20 police officers on the Dundee force have had to self-isolate following a seven-a-side football game. The boys in blue and their spouses were ordered into quarantine after one of the players subsequently tested positive for Covid-19. I’ve said it before and I’ll say it again: exercise is bad for your health. 

Originally published in the Scottish Daily Mail. Letters: scotletters@dailymail.co.uk. Image by Peggy und Marco Lachmann-Anke from Pixabay.

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