Build, Build, Build says the Prime Minister, Doubling Down on Levelling up
The Prime Minister was in Dudley at the end of June. Boris Johnson announced his “New Deal” for Britain, sharing his vision for the future. Build, Build, Build was the slogan on the podium.
Hi vis jackets and hard hats were hanging in the backdrop. Ready for action, shovel ready, the shovels were absent in the improv scene.
Money would be allocated, planning delays slashed. Greater Crested newts would pay the price of building a better Britain. “The newt counting delays are over”, said the Prime Minister. Nurturing newts is a “massive drag on productivity and the prosperity of this country”, apparently.
What to do with them? They will be reallocated perhaps, to the patchwork of woodlands, among the 30,000 hectares of trees, planted “to enchant and re-energise the soul”.
We must capture the spirit of the British people, “bottle it, swig it, and I believe we will have found if not quite a magic potion, at least the right formula to get us through these dark times”.
The Prime Minister warned of dark times, dark times in which the virus is “circling like a shark in the water”. The luckless people of Leicester have paid the price of spending too much time on the beaches of Rushey Mead.
More hospitals, more schools, more policemen. Building back better, building back bolder, building back faster. The Prime Minister has established “Project Speed” to scythe through the red tape and get things done. Swigging from the bottle on Speed, always a dangerous combination in a spending spree.
David Smith in The Times suggested “Mr. Johnson is the least economically aware Prime Minister of recent times. Downing Street lacks the economic firepower [of the Treasury] but it did no harm to let him loose. The modest £5 billion he announced, 0.2% of gross domestic product, was neither new nor a New Deal”.
It was also very much overshadowed by the statement from the Chancellor Rishi Sunak, in March. “Over the next five years, we will invest more than £600 billion in our future prosperity. Public net investment will, in real terms, be the highest it has been since 1955”. The Chancellor is due to announce his strategy update later this month.
As the COVID-19 crisis eases and lockdown measure are relaxed, fears are rising over the shape of the recovery and increasing job losses increase.
The Prime Minister explained, we know people are worried now about their jobs and their businesses, “waiting as if between the flash of lightening and the clap of thunder with our hearts in our mouths”. He then went on to warn, “the furloughing cannot go on forever. As the economy recovers, we know the jobs that many people had in January, are not coming back”.
Over ten million people in the UK are now on the Chancellor’s payroll. Government borrowing is increasing as a result of the furlough scheme and other COVID-19 measures. The Debt Management Office will issue over £250 billion of new gilts in the first six months of the financial year, in part to fund the crisis.
The furlough scheme cannot go on forever. It may have to go on longer than government statements currently suggest. Much will depend on the shape of the recovery and the speed of the return to normal.
So, what shape will the recovery be? The Bank of England predicts it will be a V-shaped recovery. Britain is rebounding sooner, faster’ than expected, said Andy Haldane, the Bank’s Chief Economist this week. “The country is already two months into recovery”. The depth of the Coronavirus recession was likely to be less than half as bad as the Bank had feared in May.
Our forecasts have not changed. We continue to expect a V-shaped recovery. The recovery will be V-shaped but then “recoveries always are”, or have been, since 1948 when accurate records began.
QEB Webinar
Join us online for our next Brabners Quarterly Economic Briefing on Thursday 23 July. We will be looking at growth and recovery and the impact on jobs in the UK and the North-West.
We will be launching our NEW "Deep Dive" feature. This month, we take a closer look at the impact on the manufacturing sector, the latest announcements from Airbus and Easy Jet making the content even more relevant.
About John Ashcroft
We are delighted to be partnering with Dr John Ashcroft to bring you the latest in a series of quarterly briefings and monthly updates on the UK and world economy. We will be looking at markets, growth and inflation and what this all means for the North West, the UK and globally.
Dr John Ashcroft PhD, BSC.(Econ) FRSA CBIM is author of The Saturday Economist, a weekly update on the UK and World Economy and former Chief Executive of pro-manchester, John will be collaborating with us to provide insight on economic and sector specific issues facing our clients and contacts.