Following Tuesday’s bleak headlines over the effect the coronavirus lockdown could have on the economy, the Chancellor attempted to strike an optimistic note in the daily government press conference. With the OBR projection suggesting three months of lockdown followed by a partial easing could lead to the UK economy shrinking by 35 per cent, Sunak said that while the prediction was worrying the figures were in some ways unsurprising as these are unprecedented times. However, the Chancellor stressed that it was simply ‘a possible scenario’ and it ‘may not even be the most likely’.
Sunak said the important takeaway is that the economy would likely ‘bounce back quickly’ once measures are lifted. He said that there was a way back to normality:
Yes it will be difficult in the short term. I’m happy to be honest about that with people. I think the measures we’ve put in place will help and then as we get through this it will mean that we can recover quickly and strongly and get our lives and economy back to normal.
But there is a question as to who will have to pay on the road to recovery. The level of borrowing the government has undertaken means that even if the economy snaps back quickly there will be a deficit that needs to be addressed. Sunak wouldn’t give much away as to how the government could respond to this in future budgets. When asked whether the young would suffer as a result, Sunak tried to pivot back to the government’s level up agenda stating that he wanted there to be good opportunities for all individuals. He said that the best way to manage this was to grow the economy.
Clearly when the lockdown is eased will have a big impact on when and how the economy bounces back. In the Q and A, Sunak sought to play down reports that he was one of the Cabinet hawks fighting to bring the lockdown to an end sooner rather than later:
It is not a case of choosing between the economy and public health. At a time when we are seeing hundreds of people dying every day from this terrible disease, the absolute priority must be to focus all of our resources (…) in a collective national effort to beat this virus.
Those around the Cabinet table are keen to move the conversation from what’s been described as an ‘economy vs lives’ debate to ‘lives vs lives’. In order to assess the impact of lockdown, the cost to general wellbeing – from those needing hospital treatments for other conditions to domestic abuse victims – will be taken into account. While Sunak said the number one focus was health, today’s OBR report is seen within government as something that supports the argument for a lockdown easing in the coming weeks.
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