Andy Richardson: 'For some sectors, the light at the end of the tunnel is out of sight'
It’s a long road back to recovery.
From Germany to Japan, from China to the USA, economies are in freefall. The UK economy shrank by a fifth during April, the biggest monthly contraction ever. It had already fallen by six per cent in March.
The fall of 20 per cent in April is three times greater than the decline caused during the great global financial crisis of 2008-2009, from which it took 10 years of austerity to recover. We’re not done yet. A further fall will be reported through May and June as companies closed, furlough caved out the economy and redundancies bit. The upshot is simple: we are living through an economic crash the likes of which we have never seen. The unparalled economic turmoil will scar the UK economy for decades.
Chancellor Rishi Sunak is one of the few Government ministers to emerge from Covid-19 with credit.
While others have been culpable for the scandal of care home deaths, the lack of PPE, damaging hypocrisy and worse, Sunak has been a reassuring presence.
His work, however, is only just beginning. The colossal investment in shoring up our economy has effectively been life support. Very soon, he must turn to ways of stimulating activity to bring it back to life.
If he doesn’t, the problems will simply mount.
Tax revenues are down, payments through the welfare state are up. Employment is down, business confidence is shot. Many companies are simply finding ways to survive. For some sectors, the light at the end of the tunnel is out of sight. While construction and retail are back and some forms of sport and leisure are gradually easing back, others can but dream.
Theatres, for instance, have suffered losses of at least £630 million and more are closing each week.
Like nightclubs, they cannot trade in an era of social distancing; they only make a profit from the last 10 or 20 per cent of customers, not the first 80 or 90 per cent – those simply cover costs.
A two-metre social distance reduces their capacity by around 80 per cent, a one-metre social distance by 50 per cent. The numbers don’t add up and the show won’t go on.
We’re only just heading into summer, but with all sectors of the economy affected it’s going to be a long winter.
