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Suddenly the possible economic catastrophe becomes centre stage

April 15th, 2020

The cost of fighting the coronavirus

It has always been the case since the the scale of the crisis became clear that making saving lives the priority was going to come at a huge economic cost.

The OBR report yesterday with all its projections starts to quantify the challenge ahead and in the meantime the new Chancellor has to find a way of balancing what appears to be the irreconcilable.

Sunak starts with a lot of goodwill on his side after his performance so far in the job. He doesn’t have any baggage and his ratings have been very high. What this means is that the public can probably take things from him that they would find less palatable from other political leaders. This is a fantastic asset for the young Chancellor and he must not squander it.

This is how the Times leader assesses what was said.

Rishi Sunak, the chancellor, stressed yesterday the hardships ahead and that the economy will take a significant hit. That’s why his policies are aimed at mitigating it. The Treasury will guarantee loans (and some grants) to business and subsidise companies to keep on labour that they do not currently need. This is the right course to enable the economy to pick up. But these firms need the money fast, and there is a case for the government taking up 100 per cent of the guarantee rather than 80 per cent. By leaving 20 per cent with the banks, it is slowing the flow of cash to companies, many of which are on the brink.

It is going to be a choppy road ahead and the public will more accept the hardships that are to come if they have confidence in their leaders. If that goes there could be massive problems.

Mike Smithson