More jobs will be lost in the long run. Businesses will go under. And government debt will soar even higher. Labour’s Shadow Chancellor Anneliese Dodds is pushing the argument that a circuit breaker — that is a short, sharp national lockdown — will be cheaper in the long run. It will keep the virus under control, and therefore enable the economy to bounce back quicker. Channelling her inner Gordon Brown, she has even come up with a very precise figure for that. Apparently, not having a circuit breaker will cost us £110 billion.
But hold on. Even leaving aside the point that precise estimates should always make us suspicious — is it really £110 billion, rather £107 billion, or £113 billion? — that is crazy. In truth, you can argue for or against a circuit breaker on health grounds but to argue for it on economic grounds simply makes the Labour party look ridiculous.
Another national lockdown simply keeps companies on life support
Sure, you can see what Dodds and her leader Sir Keir Starmer are getting at. A short, sharp break might well be better than months of different regional restrictions and partial lockdowns that no one understands. At the end of it, perhaps we can all get back to normal just in time for Christmas. The trouble is, there are three main problems with that analysis.
First, there is no evidence it can wipe out the virus. At best, all it can do is suppress infections for a time, after which they will surge once again once the restrictions are lifted. If we were able to sort out track and trace or, even better, roll out a vaccine in that time then it would make sense. But that, to put it mildly, seems unlikely. All we will do is take a bit of a breather. That might be better for the NHS (although even that is very debatable) but it will be bad for businesses.
Next, of all the different ways of coping with Covid-19 — social distancing, shielding, tracing — it is the bluntest. It shuts down regions and businesses that are coping just fine as well as the ones that perhaps do need more restrictions. A tea room in a Cornish village gets closed down as well a packed cocktail bar in Liverpool. That is hardly fair. And some of those businesses won’t recover — they will be lost forever.
Finally, it delays the adjustment process. Right now, the economy is adapting to the epidemic. Companies are switching to operating online. Offices are figuring out how to work from home. Restaurant chains are switching from town centres to the surrounding suburbs and new products and services are being created for a world with Covid. Since we have no idea how long this epidemic might last, that is surely for the best. But another national lockdown simply puts that back on hold and keeps companies on life support.
It’s perfectly respectable to argue we need a circuit breaker to save lives. But it is spurious to argue it won’t be expensive. And it is completely misguided to argue that it will actually save us money. In truth, the only thing that is likely to be broken by a circuit breaker is the economy. Lots of small businesses, and jobs, will be taken down with it — and it is worrying that neither the Shadow Chancellor nor Labour’s leader appears to be able to grasp that.
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