‘People should know there is hardship ahead,’ stressed Chancellor Rishi Sunak in Tuesday’s Downing Street coronavirus briefing, and he wasn’t being funny, either, on a day in which leading U.K. and world economists painted the global economy with a grey brush.
Sunak took to the podium and delivered, arguably, the most candid of coronavirus briefing, ever since Downing Street made briefing the press and, in turn, the public a daily priority. By all accounts, it was yet another example by Sunak, who has only been in the Chancellor role for a short space of time, of stepping up in the unprecedented crisis.
Yet, inasmuch as it is a welcome change – having a government official speaking openly and frankly is all well and good, really – it didn’t lessen the sting of harsh reality, what was in no uncertain terms for many most unwelcome news brought on by the global pandemic.
‘There are more tough times to come,’ warned Sunak as he talked about the prospect of a shrinking economy, rising unemployment and the government deficit reaching £273 billion, which would mark the country’s highest deficit since WWII.
The grim listening didn’t stop there with apocalyptic figures being trotted out, dire scenarios illustrated in colourful detail and the Foreign Secretary Dominic Raab, who is deputising in the wake of Boris Johnson’s diagnosis, announcing lockdown measures were likely to last at least until May 7 and could even be extended further depending on how the battle against coronavirus unfolds.
On the very same day Brits were served some cold hard truths, the International Monetary Fund (IMF) dished similar chilling warnings the global economy could nosedive in a manner that would revive the Great Depression of 1929.
The IMF predicted the global economy will shrink 3% this year before it can begin to rebound in 2021. For the United States, the IMF projected an almost 6% decline before a projected recovery of 4.7% in the next year. This happened to come on the same day Donald Trump decided to advise his administration to halt funding the World Health Organisation (WHO) over its perceived mismanagement of the coronavirus outbreak.
The extent to which the Armageddon forecasts materialise largely depends on how this public health crisis unfolds. There is still much uncertainty and speculation because without a real end in sight forecasts are just that projections of possible outcomes.
Virus-mandated lockdown measures were put in place to protect the public from the spread of the deadly virus and, by that same token, to avoid health-care systems becoming overwhelmed by COVID-19 cases. Nevertheless, these draconian measures are having an impact on economic activity and the financial and mental health of populations around the world, raising a challenge faced by governments everywhere: how to reconcile the importance of fighting the virus with restarting the economy.
The U.K. government is divided between “hawks” and “doves,” two opposing groups pushing different agendas in the debate on how and when to reopen economy. The same debate is causing a mighty standoff across the Atlantic pond where U.S. state governors are seemingly at loggerheads with Donald Trump and the federal government. Sunak, not unlike New York governor Andrew Cuomo, the main protagonist in the state versus federal government standoff in the U.S, insisted ‘it is not a case of choosing between the economy and public health.’
— Andrew Cuomo (@NYGovCuomo) April 10, 2020
But it is exactly such a case when the two are not mutually exclusive. An unhealthy society isn’t going to deliver a healthy economy and an unhealthy economy can’t accommodate all that a healthy society needs and demands, as Sunak admitted that government can’t ‘protect every business and household’ from the fallout of the coronavirus crisis.
Before the coronavirus global pandemic, Boris Johnson’s government was enjoying the momentum of a majority victory in parliament. It was meant to be the auspicious beginning of the end of relations with EU and the catalyst to eventually navigate U.K’s course into the greener pastures of bilateral wheeling and dealing around the globe.
That was then when the prevailing vision of the good life and the requisite economics needed to deliver it seemed possible. When Asia and United States, two regions Johnson’s government had a keen eye on for post-Brexit business, were thriving against the backdrop of booming economies.
Fast forward through the first four months of a year that beckoned with so much promise and instead of green pastures its nothing but grey clouds for the foreseeable, exacerbated rather ironically by almost ten years of Conservative party austerity measures that created economic dissatisfaction, deteriorated public services and stifled real wage growth among other concerns, of which all had a hand in Brexit.
The pandemic is nowhere near being over, and if it wasn’t evident before, it is now: beating the deadly virus is going to take a lot of time. When ‘normalcy’ might return is anybody’s guess, if it ever does, which is something that doesn’t bear thinking about right now. What we do know – or rather what we’re being told – is tough times are ahead and a chorus of tightening belts across the country – indeed the globe – is imminent.