This Twitter thread actually began life as a blog post, then moved to Twitter, and now I bring it back again:
The framing of this budget is that we have a Covid problem, but all will be well by the summer. This was also the framing for Sunak's first budget, last March. He was back at the Dispatch Box very soon thereafter, having to increase his support for an economy blighted by Covid.
Sunak's now going to offer some token gesture support for the next few months, just as he did last March, and then declare that by the summer we will all be eating out again, even if not with so much of a state subsidy this time. But I think he's wrong.
I have not got a crystal ball. But I do know three things. The first is that current UK vaccination policy, popular as it is, provides a perfect opportunity for vaccine-resistant mutations to develop. They may not. But equally likely, they might. That's what vaccines do.
Second, reopening schools will push R over 1. Almost all the scientific advisers say that. And R will simply increase again at every successive reopening, because each will provide increasing opportunity for it to do so. By June, at this rate Covid could be rampaging again.
Third, a tired, underfunded NHS, staffed by people already stretched to their limits, might well finally snap under this strain. Unless, of course a wise government locks down again to prevent that happening, which is precisely why we have had all the lockdowns to date.
Now, I may be wrong. Maybe Sunak's gamble will pay off. And I am not a betting person, but as a boy a favourite uncle taught me all about odds. And I would say Sunak is backing a 100 to 1 outsider here. His chance of success is remote in other words. Just like last March, in fact
Of course, an extraordinarily wealthy person whose position is unchallenged by the outcome of his wager can back such an outside chance of success, as Sunak is doing. But real lives, real livelihoods and real wellbeing depends on his gamble being right. And I don't think it is.
In summary, a gov't with a track record of exceptionally poor judgement on Covid is now backing a health, social and economic policy that has the potential to kill vast numbers more people in the UK. They have done it before, of course. They think they can get away with it again.
I wish I was not so worried about what is about to happen. But I am.
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I was imagining a very angry Richard Murphy watching Marr/Dodds/Sunak this morning
“We know that the debt needs to be paid back…what taxes rises are going to be used to pay for Covid…like households, the government faces constraints….and on they went, on and on and on
If only MMTers could stop fighting themselves and focus on ensuring a correct and wider understanding of how the modern monetary system functions. This morning and the weekend’s press shows just how much work still needs to be done…
Agreed…
I am trying to do it
I just wish that the pragmatic politics of MMT got a chance
Will Hutton predicts a K-shaped recovery, whereby instead of a general improvement coming with the end of lockdown (which may not happen as neatly as the government would have us believe), there will big winners and big losers (https://www.theguardian.com/uk-news/2021/feb/28/dont-let-pandemic-losers-slide-further-in-a-k-shaped-recovery? CMP=Share_AndroidApp_Other).
Not only this but the K will be superimposed on an already divided society. I cannot see how this is sustainable? At some point, something will break. The government may seek to further exploit rifts between its supporters and adversaries to stay in power. At some point though, I can see civil order coming apart. There are always limits to how far you can push inequality or lie about its existence.
I agree with Will
But I think the downside of the K which will be much bigger than the upside stroke
The kamikaze British always up for shooting themselves in the foot at the earliest opportunity! From The Observer:-
“But as he faces a series of painful choices, he is expected to ignore calls from NHS leaders for another £10bn for the health service to help it cope with the huge backlog of operations, the growing impact of “long Covid” and a surge in people needing mental health support.
Another NHS insider said he expected the chancellor to give the service no extra cash at all and to postpone any decision about increasing its budget from this Wednesday until this year’s autumn statement.
As the budget approaches there are more signs that the government may be winning back some public support for its handling of Covid-19. In the latest Opinium poll for the Observer, the Tories have stretched their lead to 7 points over Labour, the highest since July last year.”
https://www.theguardian.com/politics/2021/feb/27/sunaks-5bn-plan-to-rescue-high-streets-from-collapse
Why would you want to use bonds to fund the recovery from the Covid-19 pandemic?
You’ve recently told us that the bill for Covid-19 has already been paid. So has it been paid or not? Because in natural English the bill for something abnormal includes the bill for getting back to normal.
Perhaps you could be more explicit about what has already been paid for and what hasn’t before you jump on your horse with a loud-hailer proclaiming that x,y, and z have already been paid for, but not explaining that a,b and c do which need funding as a consequence of x,y and z haven’t themselves been paid for yet, so a funding stream is still required.
Read this
I can always explain my logic
https://www.taxresearch.org.uk/Blog/2021/01/26/how-to-use-local-and-hypothecated-bond-issues-to-fund-the-recovery/
My wife was horrified at the amount of debt the government had and how they were going to repay it. She couldn’t understand that it didn’t need to be repaid in the way that household debt does which is how it’s always explained.
She uses my PC rather than her laptop for online shopping and social media because I’ve got a larger monitor so I tried to explain it this way.
She was to think of me as the BoE. She was to be the government.
If she wanted to use my computer she would have to give me a chit which would get her five minutes time. I would print of the chits and when she needed some she just had to ask for them. She didn’t have to buy them, or do anything except just ask and I would give her as many as she needed. Every five minutes she spent on the computer she gave me a chit back.
So the question then was – who owed who what, and how would it get repaid?
OK. I’ve probably got that all wrong, but at least now she understands that that debt does not need to come out of her purse. (I think!)
I like it….
If someone claims we have piled up debt over the last year, the simple question is: who have we borrowed from, on what terms, and when do they need to be repaid.
The total amount of government “debt” has gone up by about the same amount as government “debt” payable to a wholly owned subsidiary of the Bank of England, which is wholly owned by the government. No third party will be demanding repayment. It is all about resource allocation.
It really beggars belief that such basic and indisputable facts are not more widely known and understood.
Agreed
You say ‘ By June, at this rate Covid could be rampaging again.’.
Anecdotally , this weekend has seen a breakout caused by cabin fever meeting early spring fever. Roads were busy. So many people out in the sun or youths partying, I haven’t seen such crowds since 12 months ago. Positive infection numbers will be picking up from that in a week.
The third wave is already indicated in many parts of the world and not far away either. This looks at least as bad as last springs infectious levels. There will be more strains from the current ill thought actions. Yes there are more vaccines coming online but they are developed for the original strain. I am coming across analysis that this time many of the casualties will be much younger.
Worst case scenarios could see the 3rd wave being even bigger. When it should be about the same as the first wave. I don’t want to mention any numbers here out of respect.
The drunken cowboy Sunak is going to spray more bullets trying to hit the side of the barn again and again. Without helping these most in need. The media is full of the crap about repaying the ‘debt’ whilst filling the pockets of this governments donors and accelerating the privatisations.
I can foresee an actual ‘war’ to layer over the top of the misery of Covid for the recipients of the escalations already being pushed by Biden.
Anyway to keep this short, I fear the badly managed, hugely fanfared, road map – just a sketch in reality l, with x marks the spot – will see us lifting restrictions officially at the end of March just to drop the hammer again not that long after.
Wil the people finally say a bad word about Bozo and his killer clowns? Because the MSM This murderous government’s messaging is wholly responsible for the deaths to come.