After This Pandemic, Our National Debt Will Have Doubled, Will Labour Demand Austerity Or More Borrowing?
Each bank holiday costs the UK economy £3 billion in lost productivity and momentum the Centre for Economics and Business Research (CEBR) has calculated.
However, during Bank Holidays, retail and tourism booms as families travel to the coast, hold boozy bbqs in their gardens or visit popular landmarks around the country. Even restaurants, hotels, pubs and filling stations see sales of accommodation, food, beverages and fuel surge. Effectively, the consumer economy carries on internally even if productivity and exports don’t. No jobs are lost, in fact, many jobs are created to cater for the surge in leisure and tourism.
Conversely, under the current lockdown, the British economy is suffering far more. Apart from food and booze, most economic activity has stopped. The government is borrowing money to pay people to stay at home. The only real wage earners are the public sector – NHS, teachers, public servants etc. (tax consumers), the private sector (tax payers) are either earning nothing, or receiving government funds, adding to the tax consumers total!
So, assuming total lockdown lasts for 2 to 3 months, the equivalent of 60-90 Bank Holidays, but without the internal tourism boost – not to mention several million job losses, business bankruptcies and plunging export revenue – we can now get some idea what the economic landscape will look like as the summer of 2020 comes to an end. This will beg the question, what will the political landscape look like going into the autumn?
How will Labour’s new leader and shadow cabinet frame their attack on Boris Johnson’s government?
Will they demand tax increases on the wealthy entrepreneurs and investors who create jobs, or will they suggest increased borrowing to invest in infrastructure and the tax consuming public sector? How much will it cost to service this debt and borrowing? We currently pay around £60 billion per year in debt interest alone, more than we spend on defence or around 80% of our education budget. Taking into consideration that interest on government borrowing is extremely low (around 1%) what will happen when debt interest increases to the historic average of 2.5%? That would cause a debt interest increase from £60 billion to around £150 billion per year!
Let’s revisit the year 2010, when David Cameron’s Conservative/LibDem coalition won the general election. Almost immediately the profligate Labour Party, aided by their lamentable friends in the mainstream media were on the attack. “Evil tory austerity and tory cuts” were words that consistently flowed from their mouths at every juncture and bulletin. Libraries, Sure Start, Welfare, NHS, the arts and every necessary reduction in spending to reduce the deficit was attacked. In fact, those cuts never materialised. Government spending and borrowing increased each and every year thereafter. Yet, as the nation’s debt doubled, the Labour Party and mainstream media attacked and blamed the government for that also!
Inevitably, Keir Starmer’s new shadow cabinet, along with the BBC, Skynews and Channel 4, will dust off that strategy and use it once more against Boris Johnson. It didn’t work out well for them last time. In 2015, after 5 years of deception and outright lies from Ed Miliband and his malevolent allies in the fake news media, the Conservative Party won a majority. In December 2019, Boris won a landslide 80 seat majority and cast Labour to the political wilderness. The British public won’t forget how the media and Liberal elite conspired to bring down a government trying to repair an economy almost destroyed by Blair and Brown. The public will be ready for their blitzkrieg of aggression and intervention. It will be countered by the machinery of 10 Downing Street, aided by an army of Boris Johnson supporters on social media.
We must not be overconfident or sloppy. We must be prepared and armed to confront and destroy those who attempt to delay and impede our next national recovery. Free of the punitive rules and punishments from the collapsing European Union, we should all find this opportunity to rebuild Britain’s new economy much more rewarding and pleasurable.
Let’s Make Britain Great Again… and this time, for the benefit of British people!