No One Is Immune From the Economic Storm to Come
Our problems are only just starting
I blame this blasted weather. It lulls us into thinking that we are passing through a sunlit dreamtime, a holiday from reality after which things will get back to normal. But things won’t get back to normal. Our problems are only just starting.
Even if, either because we find a cure or many more of us turn out to be immune than was realised, we are able to lift the restrictions speedily, the damage has been done.
Our economy is in collapse. We have taken on debt at a rate not seen since 1945. A new generation is about to learn what mass unemployment feels like. How, in the circumstances, can we be so relaxed about extending the closures? When every day in lockdown adds billions to our debt, and months, even years, to the eventual recovery, how can so many of us think it reasonable to leave things as they are “until we can be absolutely sure”?
Why, when other European countries are firing up their economies, do we remain the most timorous of all the electorates polled?
The answer, I think, can be found in a YouGov survey last week which asked people whether the lockdown was having a positive or a negative effect on various aspects of their lives.
Most of the results were unsurprising: people thought that the impact on their family relationships was positive, the impact on their social lives negative, the impact on their diet and exercise neutral. But there was one especially telling response.
Asked about their personal income, only 26 per cent of respondents felt the lockdown had made them worse off (with 21 per cent saying the effect was positive and 50 per cent saying it was neutral).
Think about those figures for a moment. Closing down most economic activity is bound to make almost everyone poorer. That should be an obvious, indeed indisputable, statement.
Look around you. Businesses are already going under, two million more people have been driven on to benefits, and the sums we are borrowing, hour by hour, will condemn us to decades of tax rises, inflation or both – which will in turn hit our productivity.
No one is immune. If you’re a pensioner, your pension will lose its value. If you’re a public sector worker, you’ll find that, as its tax take evaporates, the Government can’t afford to pay you.
If you have savings, they will be inflated away. If you’re a student, you’ll be working off these debts for the rest of your life.
Britain, as a whole, is perhaps 25 per cent poorer. Yet, so far, few of us are feeling it. That 26 per cent figure is a reminder that our economy is an inverted pyramid resting on a relatively small number of profitable enterprises. The rest of the population – whether state employees on full pay or furloughed workers who, without travel or childcare costs, are no worse off – naturally find it easier to call for caution.
“We need to put lives before the economy,” say the majority – as though the economy were some abstraction removed from human endeavour.
Perhaps we can’t help thinking this way. We are flesh-and-blood creatures. We can picture getting sick much more easily than we can picture a fall in GDP.
Only when that fall hits us directly, leaving us unable to afford the things we used to buy, will we understand that “the economy” is what we call the transactions people make to improve their lives.
And, even then, we may struggle to link our misfortune to the closures we have spent the past two months demanding.
Weather conditions along the lines of King Lear act three, scene two would be more appropriate. They might just give us a premonition of what is heading our way.
Source: The Telegraph