Anne Marie Waters
Tuesday 5th January 2021
We are only days in to 2021 and once again, Rishi Sunak, the Chancellor of the Exchequer, has shaken the money tree and found another 4.6 billion in bailouts for business. I don’t oppose this, our businesses need help, but we simply cannot go on like this.
According to today’s Daily Mail, “The Chancellor declared that venues hammered by Boris Johnson’s dramatic decision will get one-off grants of up to £9,000 to keep them afloat over the next seven weeks.
Some 600,000 premises across the UK are set to receive the cash, while another £594million is being pumped into a ‘discretionary fund’ to support other firms affected.
Mr Sunak also pointedly refused to rule out extending the massive furlough scheme again beyond the end of April, merely saying he would ‘take stock’ at the Budget in March.”
The decision referred to is the one made by Boris Johnson yesterday to once again place us in a national lockdown. This latest bailout package takes the total spent on the coronavirus crisis to more than £300 billion. These are eye-watering figures, and it feels very much as if they are going to grow even greater.
Looking back over our economy in 2020 is a depressing minefield, but I’ll do my best to clarify and summarise it here.
To begin with, our economy last year saw the greatest fall in output for 300 years. Redundancies hit a record high, interest rates were slashed to the lowest level ever, and we witnessed the highest peacetime borrowing in history. The country is now in trillions of pounds of debt. And all of this before Sunak announced more billions in bailout spending today.
To make matters worse, the economy wasn’t in great shape to begin with. In 2019, we grew by only 1.4%, among the slowest growth rates since the financial crisis of 2008. Last March, GDP slid 7.3%, but this was nothing compared to what was to come. We entered a record-breaking recession between April and May with GDP down 18%. Due to our heavy reliance on the service industry, and its battering by COVID, we endured one of the worst recessions of the G7 nations.
The Bank of England welcomed a new governor in March, who slashed interest rates to 0.1%. It was the second time the Bank had cut interest rates in the space of two weeks – from 0.75% to 0.1%. Quantative easing reached another eye-watering figure – £895 billion.
Furthermore, there was talk of yet another UK first – negative interest rates. In other words, to bring rates below zero.
Then there is the mammoth government spending. Borrowing went above £240 billion in 2020, and now a new lockdown will make this grow to figures we can’t predict. We don’t know how long this lockdown will last, and how much borrowing and bailout spending will reach by the time we are at the end of this crisis – assuming there is an end to this crisis.
So what does all of this mean? In a nutshell, it means big trouble ahead, potentially for generations to come. It will mean the government will be able to impose tax hikes, cut essential spending, and millions will be brought to poverty or close to it.
Many people believe we are facing a dystopian nightmare of extreme government control, and whatever your view on this, it is certainly true that the government will hold us over a barrel like it never has before. State dependency will increase enormously, it already has. When we’re dependent upon the state, we do as the state tells us to do.
With the collapse of small business comes the collapse of financial independence, and with it, liberty. Our private ownership will also reduce, and with it, our independence.
Tax hikes will keep us poor, and we’ll be told there is nothing in the pot for essential spending such as on policing or healthcare or housing.
Our economy dictates our lives. If we are very poor, we are subservient, we have very little power. But let’s try not to end on a wholly negative note. One thing that may come from this, and is likely to come from this, is political change. The country is unhappy, or at least, much of it is.
Reading through the history of pandemics, including those in recent history, never before has the response been to completely close down an economy. This is a first, and it’s a nasty one. Perhaps, just perhaps, the people will now rebel against those who recklessly (or knowingly) reduced us to this.
Anne Marie Waters