I was asked this morning whether it mattered that UK GDP might be 25% down this quarter.
My answer to the question was that in principle it did not. GDP is a measure prepared in three ways. For the current purpose the important fact is that it reconciles measures based on both production and sales. And the reality is that both are going to be down by a staggering degree right now. But because both are down, and we know why, it could be argued that this is of little consequence, in itself. It could be considered a blip, but only on the basis fo making one massive assumption. And that is that productive capacity survives this.
When this crisis emerged the government had three jobs. The first was to tackle the healthcare issue. By common consent it's now clear that they are failing at this.
The second was to ensure people who could not work were able to feed themselves and keep themselves and their families in their homes with all the essential supplies that they needed so that they could come out of this safe and well, physically, financially and in all health terms. It's now clear that they are failing to do this: millions are not getting the help they will need because of the obvious, and even deliberate, failure of government schemes. Many self-employed, small business owners, people who changed jobs at the wrong time, people whose furloughed employer fails, and many, many more, are going to face the harshest of financial stress during, and for a long time after, this crisis.
Third, they had to make sure that the productive capacity of the economy survived this downturn. That did not mean that it meant all companies would survive: some fail all the time. Nor did it mean that opportunity could not be taken to impose appropriate changes on sectors needing support: to do so would have made complete sense, and would have been readily agreed to, which opportunity is now being lost. But it did mean that the businesses - which are those human activities distinct and quite separate from the legal instructs that surround them, like companies - got through this crisis so that we could go back to work again when this was over. And the government is also failing at this task.
Just 1.4% of business loan applications have succeeded so far. Almost 300,000 businesses have not got the support they need. Of the £330bn promised maybe £329bn is left unspent. And many others have failed already, or will do so soon. This is way beyond decimation of business: that is a term far too kind for the scale of the slaughter of UK productive capacity that this government has delivered by its failure to provide 100% guaranteed loans on very low-interest rates, deferred for two years, spread over ten years, with a two year repayment holiday at a minimum, and based on a simple online application. Germany has done what is required. We have not, and show no sign of doing so.
It's not then GDP now that matters. It is the lost productive capacity to come that matters.
It's the chance that the recovery would give for transformation that might also be lost as a result that is an issue.
And it's the fact that there will not be businesses to return to.
It's the fact that all the human as well as the financial capital invested in those businesses might be lost.
It's all the lost skills.
And the lost hopes.
The lost generation of school and university leavers who will not get the experience that they need in early career stages.
It's the lost economy to come that matters in that case.
And the government still has no clue about this.
I strongly suspect that not only will we have the worst death rate in Europe, we will also have the worst economic outcome in Europe now too. That's because this government really didn't and doesn't understand that it had a simple job to do - which was to make good all the missing capital for the time being precisely because the longer-term cost would be vastly greater if it did not. It has flunked that task, appallingly.
And there's still Brexit to come.
Is recovery from this possible? It is, of course. But it will take a very, very different mindset from that of this government to achieve that goal. I just hope the demand for that alternative develops. But right now there's still no sign of it.
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I remain convinced that this government is likely to repeat all the mistakes of the last 10 years. They are mired in ideology and incompetence. Like the Bourbons
They propagate a Death Culture!
Your article is….a litany of total failure by Kim Il Johnson’s government. ALL Tory governments since Thatcher onwards have been total failures – if the aim of gov’ is to offer most/all citizens a “better” future (in what ever way you care to define “better”). The virus has exposed this Tory gov for what they (& all preceding ones) are composed of: ideologues & chancers. The pond has drained & we can now see that they never had any swim wear.
The problem is a functional one: functionally, this & any Tory gov including Thatcher’s, is incapable of addressing the problems the UK faces (soon to be former UK?) even in the most inadequate & incompetent fashion because as you noted in your previous blogs, the tories are only interested in power & its retention – not its use since this implies doing something – & doing something might upset people (cancelling Cheltenham might have upset 1/4 million people). This aspect is exacerbated by Kim Il Johnson being a populist & thus will only do things to make him liked.
Until the virus, all UK problems were kicked down the road/swept under the carpet because they were difficult and addressing them could have upset people & could have risked the tory hold on power. The virus trumps this – & then some.
Not even the press is holding the gov’ to account. You might not like Campbell but in this article he poses questions which the UK press have utterly failed to ask:
https://www.thearticle.com/media-questions-at-no10-briefings-are-woeful-here-are-20-they-should-ask
So it is not just a gov’ failure, or the failure of the 4th estate but a generalised societal failure over a 40 year period which culminated in the Dec’ election and victory for the party of clowns. Paraphrasing “V” – “but if you really want to see who it truly to blame – you need only look in a mirror”. This is not aimed at you or indeed the other commentators on this blog site – but rather the UK population. They have been “groomed” by the Tory gov and the tory press & thus they are where they are. They own the problem 100%.
Addressing your final comment on “the simple job” of coming out of this disaster with an economy still worthy of the name – the clown gov is functionally incapable of doing this (evidence/example? it appointed a clown governor to the BoE) for the reasons given – since some/many of the actions could be/would be unpopular.
I would like to give a positive diagnosis regarding the economic condition of the UK. In my view it is a virus patient, it is in an ICU, the doctors are for the most part incompetents and the outcome looks uncertain/terminal.
As usual I have only a general, unscientific philosophical take on these complex issues. So, for what it’s worth ….
When one cuts away all the media & ideological crap that regrettably dominates the increasingly indigestible coverage of this wretched crisis, and goes directly to the core of the ‘problem’ (and I’m excluding the medical aspect), the solution is both simple and logical – as you (and other heterodox sources of wisdom) have gone to enormous lengths to explain not just recently but over many years. Which begs the question – why don’t governments ‘buy into’ the obvious? There’s a kind of finger and moon Zen-like analogy. I can only surmise that either they are simply ignorant (which includes ego issues) or afraid of losing power. In either scenario, expecting ‘them’ (in this instance sociopathic Neo-liberals/cons) to change is unrealistic.
Being an agent of change can be a soul-destroying mission. All one can do is to keep reiterating the basic truths in the hope that ‘externalities’ (events, dear boy!) ultimately demand implementation of the radical solutions that have been available in ‘plain sight’. However, this will necessitate some form of revolution from the bottom up. It’s a tragedy that historically it has been triggered by an unacceptable level of human death & suffering.
This current threat to global socio-economic well-being should be a source of extreme concern to citizens everywhere. There is a strong possibility that it will provide another opportunity for the political and financial oligarchs to concentrate their power even further. In the case of politicians through grabbing increasing ’emergency powers’ and making them permanent. Here, the current unassailable Tory majority and ineffective opposition will prove to be major deterrents to reform. In the case of the financiers through grabbing cheap assets (just look at the Dow!). Both strategies are feasible with an acquiescent public subdued with incessant & intentionally manipulated fear stories.
All crises present opportunities either for Establishments to shore up their power base and strengthen their implements of control – as Trump is desperately trying to do – or for for progressive change to create a fairer, more democratic and sustainable society. History doesn’t offer many encouraging lessons. Let’s hope this time is different. Personally I’m not optimistic mainly because of the vehicles of mind-control and access to wealth available to the Neo-libs.
And so the fight continues. When this current viral threat to human health has been subdued, our attention must then revert back to the forever escalating environmental crisis, itself demanding a new economic paradigm against the backdrop of a probable global depression. One can only hope for the sake of future generations that Margaret Mead was indeed right.
Thank God for decent coffee 🙂
Like Brexit, the business community seem not to be using their collective voice, at least as we see it in the media. Or are the Conservative supporting newspapers -four fifths of them- simply not reporting? What of the electronic media?
When I left school I worked two insurance brokers who told me business was the backbone of the Conservative party. It is now seems to be the party of the banking interest as they seem to be the only ones who will benefit.
Surely, in the face of such an obvious disaster, they will find their voice?
I doubt it…
They did for one moment
And then Boris got ill…
Now it’ a sin to say anything
“When I left school I worked [for] two insurance brokers who told me business was the backbone of the Conservative party. It is now seems to be the party of the banking interest as they seem to be the only ones who will benefit.”
Unfortunately it seems that with much encouragement from neo-liberal Conservatives, they tried to turn banking into an insurance business; then banking became not a casino (as is often claimed); but a ‘game’ to which we might fairly give the technical name of ‘pass-the-parcel’. The music stopped in 2007. Oops! In the age of the Hedge Fund Manager or the CDS, I would genuinely be interested to see a watertight legal definition of a ‘bank’, that adequately excluded ‘insurance’.
The Government and their Media chums are now busy trying to figure out a way they can repeat the trick; and pass the parcel of responsibility for the utter failure of Government planning we are all now facing (especially longer term for the NHS underinvestment over 10 years of austerity, and since 2016 for the known hopeless inadequacy of epidemic crisis management). The very short term failures are not the most critical ones, because tragically ‘we are where we are’ and the emphasis must be on adequate testing, PPE and recovery of control; and focusing principally on these failures will serve mostly to deflect attention from the failures in the big strategic issues.
I suspect Government will go for the ‘long grass’ option. As soon as they can, set up a vast, hugely eminent judicial enquiry that will paralyse public discussion for at least five years, kick the can down the road and hope that by the time it reports, around 2027 (6 volumes, 4 million words), the public has forgotten in a haze of over-promoted TV sport, celebrity baking and Royal Events, what on earth all the fuss was about; even if they are fighting over scraps of food in the street in the pauses between the breadless celebrity circuses which will assuredly accompany the double-down Austerity to which Conservatives can never help themselves resorting at the earliest opportunity. That should do it.
I have lived in Britain all my life. Nobody could justly call me a cynic (but I confess I am an admirer of Diogenes).
“Government will go for the ‘long grass’ option. ……..judicial enquiry five years, 2027 (6 volumes, 4 million words), the public has forgotten, over-promoted TV sport, celebrity baking and Royal Events, Double-down Austerity to which Conservatives can never help themselves resorting at the earliest opportunity.””
100% correct.
“a nation or world of people who will not use their intelligence are no better than animals that do not have intelligence, such people are beasts of burden and steaks on the table by choice & consent” William Cooper: “Behold a Pale Horse”.
That is the reality of the UK.
I fear that the only way it will be possible to get through to this government just how unspeakably awful they have been and are being now is with the hard death numbers. There was a comment on the Today programme this morning about the deaths in Scottish care homes. Extrapolating that to the UK since the rest of the country is never told just how awful care home deaths are, I come to the conclusion that it will be at least an additional 5000 highly likely many more than that. In addition there are the uncounted deaths at home which do not get onto the statistics until very much later. It looks like we already comfortably exceed the death rate in Spain and Italy!
You can read more about this here: http://outsidethebubble.net/2020/04/13/massive-underreporting-of-covid-19-deaths/
Across similar countries in the EU the stats suggest that there are as many deaths in care homes as hospitals
There is a care home in Durham with 13 deaths from Coronavirus. They have 72 beds. Are they unusual? I don’t know. It’s all the data I have.
Apparently there are 410k people In care homes in the U.K….
Things may be worse than we think.
The evidence in Europe is that half of deaths are in care homes
[…] that the upper limits described above are more likely to be correct. Richard Murphy on his blog (https://www.taxresearch.org.uk/Blog/2020/04/13/we-wont-just-have-the-worst-health-outcome-in-europe-…😉 confirms that other European countries are finding that care home deaths are much the same as […]