The brand new and extra transmissible omicron variant threatens to be a tsunami for the NHS and the British financial system. Reluctantly, the UK authorities handed new “plan B” COVID restrictions, requiring masks to be worn in outlets and public transport, with a diktat to do business from home if potential. The devolved administrations have gone additional, together with inserting limits on indoor and out of doors gatherings.
Thus far, one other nationwide lockdown has not been introduced. However the prime minister, Boris Johnson, has warned that additional restrictions could also be forthcoming a while after Christmas Day, if the variety of omicron circumstances and hospitalisations get uncontrolled.
But whereas the federal government is deliberating on whether or not – or when – to impose new COVID restrictions, the general public seem like one step forward. Considerations about omicron have led to a dramatic fall in high-street footfall on the historically busiest time of the 12 months. Hospitality has been particularly hit, with bookings for Christmas events and lunches cancelled and omicron most likely additionally affecting the sector’s meals provide chain. Companies within the sector are estimated to have misplaced 40% to 60% of their commerce in December.
In response, the chancellor of the exchequer, Rishi Sunak, has introduced an emergency assist package deal of £1 billion for enterprise, with a deal with the leisure and hospitality sector. These companies can apply for money grants of as much as £6,000, whereas there may be additionally some help to cowl workers sick pay.
Whereas welcome, nevertheless, this package deal is unlikely to be ample. Many pubs and golf equipment could possibly be anticipated to absorb this form of income (and extra) in a night or over a weekend – particularly through the festive interval. There isn’t any furlough scheme for displaced staff within the sector or assist for these on zero-hour contracts, whose hours can be diminished as a result of falling demand. There may be additionally no assist for the retail sector.
If omicron is as extreme as some projections recommend, then a post-Christmas lockdown may be very a lot on the playing cards. If that occurs, extra authorities assist will have to be forthcoming. But it would come too late for the 1000’s of companies and livelihoods which are already scuffling with the affect of the brand new variant, so it might have been wiser for the federal government to do extra for companies earlier.
Misapprehensions round public debt
Sunak is reportedly eager to determine his fiscal conservative credentials and has been one of many voices across the cupboard desk arguing in opposition to additional COVID restrictions. However prioritising fiscal conservatism at current looks like a misunderstanding of the place we’re on this disaster.
The pandemic is a as soon as in a lifetime shock that requires daring and decisive motion on each well being measures and on the financial system. On this regard, the federal government shouldn’t be as fiscally constrained because the mainstream media typically portrays. Whereas authorities borrowing is at post-war highs, UK gilt yields are very low, which suggests the price of servicing any new debt (as a proportion of GDP) is negligible.
It’s also vital to emphasize that the federal government doesn’t function like a typical family. Treasury bonds or gilts are largely bought by the Financial institution of England, which is owned by the federal government regardless that it acts independently, so technically the federal government can by no means actually run out of cash. We additionally noticed how economies that took fast, robust motion on COVID within the early levels of the pandemic carried out comparatively higher.
Failure to behave now, and decisively, on each COVID and the financial system, not solely threatens the long-term well being but additionally the wealth of the nation.
Phil Tomlinson receives funding from the Engineering and Bodily Sciences Analysis Council (EPSRC) as a part of the Made Smarter – Individuals Led Digitalisation mission.