The Covid-19 coronavirus has turned our assumptions of the world we know upside down. After a phase of rising populism and protectionism in the geopolitical tumult stimulated by the US-China trade war and Brexit in 2019, Covid-19 will put further stress on globalisation, pushing the presumptions on which our interconnected global economy functions to the limit.
It will expose the fault lines of inequality, deepened by austerity, in shocking and brutal ways. Here in the UK, it has already exposed the thin veneer of respectability holding civilisation in place by the mercy of our lizard brains, as runs on toilet paper, hand sanitiser and pasta expose our animalistic nature in the face of uncertainty and survival.
Despite the natural world order being reconfigured with each new development of the pandemic, it was still a shock to see the new chancellor, Rishi Sunak, end his budget speech by proclaiming it a “people’s budget” of the “people’s government”. It seems that not only has the Conservative Party borrowed voters from the Labour Party in the December 2019 election, it has also plagiarised Keynesian slogans and policies from opposition leader Jeremy Corbyn and shadow chancellor John McDonnell.
Supply chains will take a long time to recover, and so will the normal ways of going about business through travel and meetings
Though the speech was most certainly written by controversial chief government adviser Dominic Cummings, it was incredible to hear these policies (brilliantly) orated by Sunak with the confident Oxbridge, establishment manner of one those men raised to believe they are born to rule the UK and which only an Etonian or Wykehamist schooling can buy.
The irony of the Tories enlarging the state aside, Sunak ended a decade of austerity with a fiscal stimulus of £30bn, of which £12bn is ring-fenced to fight the coronavirus directly and £6bn earmarked to boost the National Health Service (NHS). The Conservative-led government is aiming to shore up jobs and livelihoods against the twin shocks of the pandemic and the effect of Brexit in a weaker global economy. Sunak also confirmed a five-year, £600bn capital spending plan for infrastructure and research & development.
The spending commitments were announced in concert with a half-point interest rate cut from 0.75% to 0.25% from the Bank of England, which the government hopes will insulate it from the large borrowings. But will the measures be enough as the world hurtles into what is certain to be the largest economic shock since the 2008 financial crisis? Markets initially welcomed the UK’s measures, but it was not enough to stop the FTSE falling further still as national lockdowns were announced across Europe later in the week.
Everything we took for granted about our assumptions of global trade and economics will have been sorely tested by the time we get to the other side of this pandemic. With each new death, the stock market sheds billions. Supply chains will take a long time to recover, and so will the normal ways of going about business through travel and meetings.
Much depends on the faith citizens have in their governments’ strategies for dealing with the crisis. The faith in the state and the trust we have in the maintenance of public order is priceless. The extent of recovery and resilience of our economies and societies totally depends on governments’ ability to co-ordinate the public health response in the first instance, and bail out industry in the second instance.
Covid-19 is an early test for a very new government in the UK. It has already had to perform a U-turn on its view on mass gatherings. We can only hope it does not realise too late it cannot spend its way out of everything if the public has no faith in its leaders.
• Dr Masie, a former senior editor of the Financial Mail, is chief strategist at IC Publications in London and a fellow of the Wits School of Governance.
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