The unlocking of Covid restrictions is likely to crash the economy this summer

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I have, ever since this pandemic began, been saying that the eventual reopening of business when lockdowns ended would always be harder than the lockdown phase, always assuming that the government would supply the support business needed to ensure that commercial companies had a chance of making it to the other side.

I maintain that view now. As we are seeing, supply chain disruptions and chaotic labour markets, both also disrupted by Brexit, have already hinted at enormous difficulties and strains to come. These will punish business cash flows, and it is always stressed cash flow that kills businesses in the end. Just as all people die when their hearts fail, so too is it true that businesses fail when they can no longer pay their creditors.

But, what I had not imagined was that the government was going to make the difficulties business was always going to face in this situation so much worse. Remember, the furlough scheme is now winding down, taxes are now becoming due, furlough loans are now having to be repaid, and to top it all the government is winding all lockdown restrictions at the time that it acknowledges that Covid infections are going to reach all time peak rates exceeding 100,000 (and maybe much more) a day.

The Guardian and FT both include forecasts today that this summer it is likely that maybe 2 million people will simultaneously have Covid, and maybe 10 million should be isolating at any one time.

For those thinking that vaccinations will, protect them, Israel is finding that Pfizer jabs are only 64% effective against it. They are also now aware that the effectiveness of early Pfizer vaccinations is rapidly wearing off. It is unlikely that AZ is much better, if at all.

And if people want to think this is now a minor illness, ask Andrew Marr, who clearly found it otherwise. Or simply ask my son, who has now had Covid twice, and is finding his second bout very hard to recover from, but is at least doing a lot better than his university friend who spent two weeks in ICU.

The scale of business interruption from Covid this summer is going to be unprecedented. Employees are going to get sick. Once it is appreciated how dangerous unlocking is really going to be the scale of voluntary lockdown by those wanting to take reasonable protective measures against the risks the government is deliberately exposing them to is going to be very high indeed.

And in this immensely stressful environment the government is ending Covid support for business. It cannot, it seems to think, afford that support any more. Or maybe, with the logic of Ayn Rand now flowing freely from the Health Department and Treasury, it has decided that it is simply time for us to learn to stand on our own two feet, until we can’t of course, when it will be time for us to bear the consequences of what will not be our own fault.

Whatever the reasoning, businesses without support, with uncertain staffing, without customers who will be too frightened to spend and whose wallets will undoubtedly be going into lockdown in the face of such uncertainty, will fail.

Clearly I can’t say how many will. I am not clairvoyant. What I can at with certainty is that it will be many more than would have done if the government had not decided to simultaneously withdraw Covid support and unleash Covid infection mayhem on the country at the same time.

It takes a special firm of incompetence to deliberately create maximum possible business risk for the UK’s private sector but this is what this government is doing. It’s the sort of incompetence that should have culpability attached to it, but that never seems to happen.

What I do hope is that people will appreciate that the loss of businesses and jobs that are likely to flow from the catastrophic decisions the government is now making will be entirely its responsibility. The resulting stresses will have been chosen by the government. The costs will be deliberately incurred. The damage, which will take some time to recover from, will be significant.

Meanwhile, there are still those around government who think we are facing a rapid recovery where inflation is the risk. How wrong can they be?

And we have an Opposition who does not seem to understand that the consequences of unleashing exceptional levels of Covid infection extend far beyond the risk that the NHS might collapse, which most linked to it now think very likely.

Joined up thinking should not be hard. Apparently it is. We are in trouble because politicians seemingly aren’t good at it. But the risks that will make this summer economically ugly, on top of all the health concerns that will arise, are plain to see for those that will look. This is not going to end well unless some very big changes in government policy happen very soon. I am not expecting that to happen. Instead I predict many tears before this is over.