Economic outlook is stormy, despite budget giveaways

Friday, 13th March 2020

Rishi Sunak

Chancellor Rishi Sunak

A PERFECT storm is brewing for the economy – the economic repercussions of the coronavirus contagion and the effects of a growing world recession.

And the victims will be the weakest in society – the low paid, struggling small businesses, the millions on zero-hours contracts and cash-in-hand jobs. Corporations, large companies and multi-nationals can see the storm out – at least for some months, if not longer.

The budget giveaways for small businesses, announced by the Chancellor yesterday (Wednesday), will no doubt help them. Not having to pay business rates for the coming year – if that is the hand-out in the budget – means small businesses in Camden, such as small shops, cafés, and other retail outlets, will save several thousand pounds in rates.

But, in general, it will not make up for the amount of income that will disappear through collapsed sales and payment of wages to staff who are forced to stay at home because of the spread of the virus.

Those on zero-hours contracts and other patch-up jobs – what will happen to them? At present, it looks as if they – like those who run small businesses – will get statutory sick pay for two weeks. But sick pay is about £96 a week. If you are earning £200-250, net pay, and you have to “self isolate” at home, unless your weekly pay is covered by your employer – and that may be problematic – your weekly income will suddenly be slashed.

This may seem too apocalyptic. But it may become real in the weeks ahead, perhaps in two weeks hence, if a panic begins to set in.

Those with the least symptom of the virus will either be told to go home – or will simply stay there, and not go into work.

Small shops and back-street businesses employing two, three or a few workers – they’re the ones that will be facing a crisis.

On the surface, it looks as if the Chancellor is throwing cash at people and all will be well. But beware – a large dose of spin is being used as well. Only a colossal amount of cash paid out to cover lost wages and loss of turnover suffered by small businesses can keep the economy going.

A centralised state-capitalist economy or one run by authoritarian governments, to be found in China and other Asian countries, are more likely to succeed in getting to grips with the crisis.

A tinkering, faltering economy like Britain’s, unable or afraid to apply Keynesian solutions on a massive scale – is likely to fail.

Here in Camden the very least the council should do is what it should have been doing in all these years of austerity – protesting in Downing Street over half-baked solutions to a crisis that cannot be wished away.

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