Soon after lockdown, as economic output plunged in Britain and the rest of the world, an economist friend told me he refused to buy into parallels with the Great Depression and other historic disasters.
His argument was that Britain and the other Western democracies had learned from the past and the unprecedented fiscal and monetary interventions this time would protect us from the huge losses of national income seen in past slumps.
It hasn’t felt much like that in the last six months, with the endless gloomy official data, boarded up stores and millions of workers on furlough.
The combination of a huge fiscal stimulus pushing government borrowing for 2019-20 up to £350bn and £300bn of money printing by the Bank of England has turned the tanker around
Along with everyone else, it looked to me as if Britain was facing a crisis of catastrophic proportions.
The goal of the Chancellor Rishi Sunak and the Bank of England was to put the economy into hibernation and keep the finance functioning so that when the pandemic receded output would come roaring back.
In his article for the Daily Mail today, Andy Haldane, the Bank of England’s chief economist, makes a compelling case that the economy stopped sinking months ago and is bouncing back.
The combination of a huge fiscal stimulus pushing government borrowing for 2019-20 up to £350billion and £300billion of money printing by the Bank of England – with possibly more to come – has turned the tanker around.
One might not recognise it from some of the headlines, but as Haldane observes ‘the economy is not falling like a stone’.
Output has now been rising for three months in a row and he estimates that gross domestic product is climbing, on average, by one per cent a week. The UK has already recovered half of its losses.
In his article for the Daily Mail today, Andy Haldane, the Bank of England’s chief economist, makes a compelling case that the economy stopped sinking months ago and is bouncing back
A big issue has been the refusal of a large part of the workforce to return to their stations.
Even that appears to be changing, with the Office for National Statistics reporting that nearly half of the employees travelled to places of work in the last week against one-in-three in the previous seven days.
None of this means that post-Covid UK is going to look anything like it did before the virus blew in.
Lockdown, social distancing and the rest has simply accelerated secular trends. The most obvious example of this is in retail and food services.
As Haldane points out, shopping is back at pre-pandemic levels with online revenues 70 per cent higher.
The disaster on the High Street pre-dated Covid-19, with big store chains such as House of Fraser, Debenhams, Philip Green’s Arcadia, M&S and others going through retrenchment. Mall operators such as Intu and Hammerson were gasping for air.
Middle market restaurant chains including the Restaurant Group, Carluccio’s and Pizza Express were struggling.
Online start-ups such as Just Eat Takeaway, Deliveroo, Uber Eats have been scoffing their cake. Before Covid, more flexible working, including operating from home, had already started.
A new generation of property operators such led by WeWork catered to the peripatetic tech community.
We should expect a large proportion of the current workforce to return to office life, but flex-working quickly could become the new normal.
The national economy could not have been subjected to shock treatment over a short period of time without leaving nasty scars.
The prospect of 7.5 per cent or 2.5m people unemployed, particularly if focused on 18-24 year olds, cannot be anything but tragic.
The ugliness of empty shops on the High Street will be with us for a long time.
And paying off the borrowing and national debt run up during the pandemic will be a marathon. The UK is highly dependent on the ability of the people in our professional services industry to travel overseas. That is going to be impaired.
But as the Bank’s chief economist notes, more optimism about prospects would help instil confidence.
Reading may have soared in the pandemic, but publishing has suffered.
The collapse of books wholesaler Bertram, with £25million of debt to trade creditors alone, is a symbol of the stress – although one suspects that Amazon’s phenomenal logistics might have a bit to do with that.
Nevertheless, those still locked down or working from home have a treat to come.
The backlog of books held back from publication in the peak of Covid-19 is set to be launched on September 3, a date etched in memory as the declaration of the Second World War.
This year it will be more B-Day than D-Day.
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