Economic ills must not lead to austerity

In my article for today’s Cornish Guardian, I have looked at some evidence on economic performance including severe dips in GDP and I have warned one and all to guard against the imposition of austerity measures, which would heap further harm onto the damage already caused by the ongoing health emergency.

The full article is as follows:

It is not surprising that official figures show the economy of the United Kingdom shrank by a record amount in April, with the Office of National Statistics reporting that gross domestic product (GDP) fell by 20.4% because of the coronavirus pandemic and the subsequent lockdown.

A key statistician at the ONS has stated that April’s fall in GDP is three times larger than the record of the previous month (a dip of 5.8%) and “almost ten times larger than the steepest pre-Covid-19 fall.”

The UK Government is now easing the lockdown, more non-essential shops are reopening, and it is working on a range of measures to get the “economy back on its feet.” The Prime Minister has himself said that “confidence will return and you will see a bounce back for the UK.” But there does seem to be inevitability that immediate prospects for the economy do look bleak.

The trans-national Organisation for Economic Co-operation and Development (OECD) has predicted that the UK will be hit worse than any other developed country. It has suggested that, in 2020, GDP could contract by 11.5%. Other experts have suggested we face the “worst recession in more than three centuries.”

There are also very strong fears that Cornwall– already one of the poorest parts of the UK – could suffer especially badly.

One particular study from the University of Southampton has assessed the economic effects of the Covid-19 pandemic on towns. It investigated four sectors “most impacted by the economic shutdown” (accommodation, non-food retail, pubs / restaurants, and arts / leisure) and found that five Cornish towns were among the top 20 locations most liable to suffer business failures and job losses.

At this most difficult time, there is considerable speculation about what the “new normal” might look like, and the importance of political decisions about the future direction of government policy cannot be emphasised too greatly.

We should remember that the financial crash of 2007 did significant societal harm and lead to massive cuts to our vital public services. At that time, the banks were provided with a bailout while the general public had to deal with more than a decade of austerity.

Looking ahead, there will be much uncertainty for individuals, families, businesses and communities, but we must guard against more austerity, which would heap further harm onto the damage already caused by the ongoing health emergency.