The Spectator

Economies run on confidence – the government mustn’t undermine it

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Throughout the past few months the government has appeared to face an unenviable choice between saving lives and saving livelihoods. Nevertheless, a fortnight ago the path seemed clear. The numbers of Covid infections were falling, but the economic news was dire — hence Boris Johnson was engaged in a drive to reopen the economy as quickly as he could without prompting objections from his scientific advisers. Now things feel rather different. Economic figures from recent days have surprised on the upside: the CBI’s figures for retail sales in July show a sharp V-shaped recovery. Sales of cars and houses were running ahead of last year — during July at least. At the same time, though, the outlook on Covid-19 has darkened. Recorded new infections have inched up, echoing what has been happening in many European countries for several weeks.

The Prime Minister’s tone has changed utterly. His priority now seems to be fighting Covid, while letting the economy look after itself. There is no talk of further wheezes to promote growth, such as the ‘eat out to help out’ scheme which came into operation this week. Instead, Greater Manchester and surrounding areas have been sent back into semi-lockdown and the reopening of some businesses such as theatres, casinos and bowling alleys put off indefinitely. Worse still, there have been suggestions that Londoners could be banned from travelling beyond the M25 — odd, given that the infection rate in the capital is so low compared with other places in England.

In recent days the PM has risked sounding like the ‘doomsters and gloomsters’ he has attacked in the past

The virus has not gone away, ministers are apt to say when challenged over any slowness to release the country from lockdown. True, but then neither has the threat of economic depression. Indeed, the current messaging from the government risks making that threat worse.

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