Coronavirus is going to make the Chancellor’s Budget sums completely irrelevant

Imagine getting a really big job, and just a month later have to present your sums on how to get a flat-lining economy booming, at the same time as it loses access to its biggest market and is facing potential recession.

Then whack in a global pandemic, wipe $1trillion off the stock market, tank the oil price and top it all off with a boss who wants you to pluck 40,000 nurses out of thin air.

Welcome to Rishi Sunak's world. A world in which tourism has all but stopped, toilet roll has run out, and the Prime Minister is refusing to get himself tested for a killer bug on the basis that HE thinks he's fine.

Boris Johnson's relaxed attitude to the possibility of being infected by Nadine Dorries – and which of us haven't wondered if she'd destroy us all one day? – raises two important questions.

The first is that if he had to shut himself away from the world for a fortnight, whether it would make the tiniest difference to anyone except Carrie.

And the other is whether it might have an impact on next year's birth rate.


  • Budget 2020 to protect future of cash and keep ATMs open across the country


  • Budget 2020: How much minimum wage goes up next month giving two million a pay rise

But Johnson has never set anyone much of an example, except of what not to do. And so far he's doing a marvellous job of showing us that coronavirus is a lot worse than just a cough.

He was elected 3 months ago on the promise of new nurses, hospitals and police officers, investment in teachers and schools, road schemes, rail schemes, freeports and post-Brexit innovation. The wet winter added a few more billions of flood defences, grants and clean-up operations to the national wish-list, and now the Wu Flu is going to mop up all the billions he didn't have in the first place.

He always wanted to be PM, but on his terms. He did not notice that only a few PMs get to do what they promised, because events, dear boy, events.

His pet chancellor could stand up today and promise us all free teabags for life. It'd be cheap, welcome, and encourage entrepreneurs. It still ain't going to happen, just like most of what IS in the Budget.


  • It's National Tea Day! Here's why tea is MUCH better than coffee

  • How to survive the coronavirus apocalypse with more aplomb than James Bond

Rishi Sunak may promise sick pay for all, mortgage holidays, and short-term business loans, but it all has to be paid for. And there is no government that can fund a 3-month national economic shutdown.

And that is what is being threatened – 12 weeks in which the disease will surge, peak, then fade. While coronavirus itself is eminently survivable for most of us, its financial impact will be felt by everyone.

The first jobs to go will be at the firms already struggling. Then those with narrow profit margins. Eventually, the travel insurance claims made by individuals will affect the underwriters which traded in a risk they could not predict, and then banks start to totter.

Last time that happened, governments fell, mortgages foreclosed, suicide rates increased.


  • Budget 2020: New National Insurance rates to save working Brits £104 a year


  • Third coronavirus case hits Disneyland Paris – but theme park is still open

The virus is just the quake. There is no amount of 'fiscal headroom' that can forestall the financial tidal wave that has already begun, and will inevitably hit our shores in the next 18 months.

There will probably be a recession. Growth of the UK economy flatlined last quarter, and if it remains stagnant we'll be told, no doubt briskly, that it's a 'technical' recession, it was to be expected, it'll pass just like the cough.

But even if the UK discovered a coronavirus vaccine and was able to charge a million pounds per injection, its bills would never be paid. Because we cannot self-isolate ourselves from the rest of the world.

In the US, people who can get the coronavirus test for free won't bother, because of the cost of a doctor. People with insurance have to pay $3,000 a head for the same test, so they won't bother either. The bug will take more victims, as a result.


  • Coronavirus: New York prisoners could dig mass graves to bury pandemic victims


  • Coronavirus: Donald Trump flew with quarantined congressman on Air Force One

In China, the world's supply chains and commodities trading are already struggling. In the year to come, that will trickle through to new smartphones, Christmas toys, computers, machine parts.

In the West some of the scariest debt is carried by car finance firms, offering customers a £50,000 new car for small monthly payments and the change to sell it on after a few years. If used car prices fall, or debtors default, that market will collapse – taking with it demand, car factories, component manufacturers, and millions of car-building jobs worldwide.

The only country likely to be insulated from a global crash is North Korea, whose economy has been self-isolating for 70 years. Its meagre finances may survive better than its malnourished population.


  • Coronavirus: North Korea plots purge of health chiefs after 180 soldiers die


  • Coronavirus: Every sporting event cancelled and postponed by outbreak

Sunak can rewrite the Tories' own spending rules, shuffle the budget headings and talk about how he'll do "whatever it takes" to support the economy.

But he's not in charge of the world. He is at its whim. And, for a short while, there will be chaos he cannot predict or compensate for. When people head back to work, its ripples will continue.

The 2008 crash had its roots a year earlier, with problems in the mortgage markets, and it's taken a decade for wages to recover. Coronavirus' true impact will not be felt for years.

Bless Rishi for trying. For saying the NHS will have all it needs, when what it needs is for the past decade not to have happened, and to get back the 160,000 beds it has shed since the late 1980s. It's not like he can buy it many new ventilators – every other nation on Earth will be trying to buy them, too.


  • Yorkshire Tea says 'try to be kind' after facing abuse over Chancellor's photo


  • Who is Rishi Sunak – the new Chancellor appointed just 27 days before the budget?

There are some upsides to all of this, though.

Firstly, the financial impact of coronavirus will combine with that of Brexit, neatly making both of them completely deniable, depending on who's speaking. Leave or Remain, you'll be able to blame the s***storm that's coming on the other team.

And secondly, anyone facing election in the next year or so who has gone hard against the idea of free-to-access healthcare is going to get an absolute WHACKING at the polls.


  • Donald Trump tweets racial slur as Elizabeth Warren drops out of US election

Whatever they tell you, it is not possible to avoid the world economy catching a hell of a cold. Nor is it possible for a government to insulate itself from the political impact.

Budgets are always a combination of guesswork, hope, and politics. With coronavirus, those are more chaotic than usual, and there is no amount of hand-washing that can stop it affecting all of us.

If the Wu Flu doesn't get you first time around, it'll get you on the backswing. Toilet roll is the least of your problems.

Source: Read Full Article