THERE is a health crisis and an economic crisis. The Government has to tackle both.
For the last month the Government has put the health crisis first. They are right to make the overriding aim to do all they can to protect lives. That will always have priority over economics where the two are in conflict.
They were very worried lest the NHS could not cope with the likely number of serious cases of people suffering from Covid-19, so they settled on a policy of lockdown to slow the spread of the disease.
The good news is they have bought some time which has been used to increase NHS capacity substantially to fight the virus. It has also allowed more data to emerge around the world, confirming that this nasty virus is most likely to kill the elderly and those with other serious medical conditions. Most other people get milder versions which they can recover from at home.
Meanwhile, as some of us forecast, the stringent policy of preventing many companies from trading and stopping many people working is having a hugely damaging effect on jobs, businesses, tax revenues and our capacity to supply ourselves beyond the essentials.
If the restrictions can be lifted soon, there is a chance of a decent bounce in activity, and the resumption of many jobs. If the lockdown drags on for longer, more businesses will go bankrupt, more self-employed people will lose their customer base, more small businesses will fail to pay the rent, many more people will be made redundant.
When restrictions are eventually lifted, there will be far fewer companies and people able to respond. There will also be less demand, as the many people who have suffered financially from the closure period will not be able to pick up where they left off with discretionary spending.
So we now need a policy which still gives priority to protecting the elderly and vulnerable from the virus, whilst getting more companies trading and more people back to productive work.
If we had more working, we could afford to do more for those who need to self-isolate for a long period to protect themselves from a virus which could kill them. The new work could include more home deliveries and more remote contacts with the vulnerable to improve their quality of life whilst avoiding direct contacts with others.
We also need to protect the workforce from catching it. That may well mean asking firms to keep many more people working at home whenever possible. It may mean staggering hours of work as well to reduce crowded trains and to allow safer travel patterns.
It may mean asking people when travelling or working near others to wear a mask. It may mean more technology for both office and factory to limit human social contacts.
Business is flexible and will want to co-operate with such rules. It will wish to put the interests of its staff in the front of its decisions. It can only do so if it is allowed to trade again and to collect revenue from customers. We may have to live with this virus for many months without proper cures or vaccines, so we had better start adapting now.
We should expect some dreadful numbers for the decline of income and output, with so much of our economy shut down or on very reduced working. This has swift effects on savings income, on rents and dividends and on payment for employment. This in turn cuts future demand.
As businesses close, so capacity to produce goods and services is reduced. Despite the Government’s furlough scheme, there will be hundreds of thousands more unemployed in the deepest recession any of us have ever experienced. That makes it vital to ensure it is short-lived, by lifting the outright bans on working and trading as soon as possible.
There is a way to keep the downward pressure on deaths and serious illness, whilst starting to relieve the intense squeeze on jobs and incomes. We can only afford the NHS if we have a strong economy. Government schemes to pay companies and the self-employed some money in lieu of work cannot make up for the huge losses, and so far the schemes have proved slow to open and patchy in coverage. We need faster action to save jobs and business.