By Tom Carter
Credit: Lerone Pieters
2020 - the year that changed everything. At the beginning of January, no one could have predicted the cavalcade of hardship that would follow. All aspects of society thrown into disarray through lockdowns, social cancellation, and (being discussed today) economic fallout.
Historically in times of crisis, leaders and governments opt for a complete re-evaluation of their economic approach, and the UK’s response to fighting coronavirus is no exception to this. With the introduction of the furlough scheme, transformation of entertainment venues into makeshift hospitals and record amounts of borrowing, the COVID-19 pandemic has delivered potentially the most left-wing Conservative Party ever to govern.
While the Government’s new economic policies have effectively seen prevention of total economic meltdown so far, it must be remembered that they are only temporary, therefore, the bigger issue lies ahead; what happens when the clock runs out?
Currently, businesses across the country are just about staying afloat, and that’s with government support schemes such as furlough and ‘Eat Out to Help Out’. The damning reality is that when the money from above stops trickling down to these firms, there will be a flood of economic turbulence.
With the furlough scheme due to end in October, businesses (who are struggling as it is) will inevitably have to rethink their monetary situation, most importantly in the form of cutting staff costs. The redundancies have already begun to rear their ugly heads in certain areas of the country, with factory workers and several others finding themselves out of a job. Latest economic projections are tracking six million unemployed within the next year; a catastrophic situation.
On top of this, businesses in the hospitality sector can only operate at 50% capacity, which wouldn’t be sufficient revenue to stay open in the ‘normal’ economic climate let alone in the midst of a pandemic. The chance of survival for these firms is growing bleaker by the day.
When looking back to the December 2019 General Election, every Labour policy Corbyn put forward was met with jeers, masses of opposing views stating that “you can’t just throw money at everything”. Fast forward to 2020, the Tories find themselves doing exactly that. The usual ‘leave the economy alone’ stance has been completely abandoned in a bid to prevent a depression, but crucially it hasn’t worked. While a recession was somewhat inevitable in these adverse times, the scarier idea is the government’s plan for post-coronavirus, or more specifically the lack of one.
So far, Boris Johnson and Chancellor Rishi Sunak’s plan for dealing with the impact on businesses has been to give – give - give. Funding wages, discounts on meals, hundreds of billions of pounds worth of borrowing, with no real clue to what the next steps will be. No word of an exit plan, and a no-deal Brexit looming increasingly large. Ultimately, this government has spent the last six months papering over the cracks, knowing full well the support beams won’t hold.
What does this mean for the economy? More liquidation. More redundancies. More unemployment (maybe record numbers). As of right now, the government has released no concrete plan for when the financial support finishes, leaving business owners and their staff in economic turbulence like never before.
Many see 2020 as a ‘write-off’ year, one they will be happy to see come to an end. As though everything will be contained to these few set months. But the reality is that the full consequences are yet to be felt. This economic storm is just getting started for the UK, and with an inexperienced, national debt-building cabinet at the helm, the dark clouds are already circling; the worst is yet to come.
Historically in times of crisis, leaders and governments opt for a complete re-evaluation of their economic approach, and the UK’s response to fighting coronavirus is no exception to this. With the introduction of the furlough scheme, transformation of entertainment venues into makeshift hospitals and record amounts of borrowing, the COVID-19 pandemic has delivered potentially the most left-wing Conservative Party ever to govern.
While the Government’s new economic policies have effectively seen prevention of total economic meltdown so far, it must be remembered that they are only temporary, therefore, the bigger issue lies ahead; what happens when the clock runs out?
Currently, businesses across the country are just about staying afloat, and that’s with government support schemes such as furlough and ‘Eat Out to Help Out’. The damning reality is that when the money from above stops trickling down to these firms, there will be a flood of economic turbulence.
With the furlough scheme due to end in October, businesses (who are struggling as it is) will inevitably have to rethink their monetary situation, most importantly in the form of cutting staff costs. The redundancies have already begun to rear their ugly heads in certain areas of the country, with factory workers and several others finding themselves out of a job. Latest economic projections are tracking six million unemployed within the next year; a catastrophic situation.
On top of this, businesses in the hospitality sector can only operate at 50% capacity, which wouldn’t be sufficient revenue to stay open in the ‘normal’ economic climate let alone in the midst of a pandemic. The chance of survival for these firms is growing bleaker by the day.
When looking back to the December 2019 General Election, every Labour policy Corbyn put forward was met with jeers, masses of opposing views stating that “you can’t just throw money at everything”. Fast forward to 2020, the Tories find themselves doing exactly that. The usual ‘leave the economy alone’ stance has been completely abandoned in a bid to prevent a depression, but crucially it hasn’t worked. While a recession was somewhat inevitable in these adverse times, the scarier idea is the government’s plan for post-coronavirus, or more specifically the lack of one.
So far, Boris Johnson and Chancellor Rishi Sunak’s plan for dealing with the impact on businesses has been to give – give - give. Funding wages, discounts on meals, hundreds of billions of pounds worth of borrowing, with no real clue to what the next steps will be. No word of an exit plan, and a no-deal Brexit looming increasingly large. Ultimately, this government has spent the last six months papering over the cracks, knowing full well the support beams won’t hold.
What does this mean for the economy? More liquidation. More redundancies. More unemployment (maybe record numbers). As of right now, the government has released no concrete plan for when the financial support finishes, leaving business owners and their staff in economic turbulence like never before.
Many see 2020 as a ‘write-off’ year, one they will be happy to see come to an end. As though everything will be contained to these few set months. But the reality is that the full consequences are yet to be felt. This economic storm is just getting started for the UK, and with an inexperienced, national debt-building cabinet at the helm, the dark clouds are already circling; the worst is yet to come.
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