Ministers’ game of chicken with people’s jobs will only slow the recovery further
Britain’s economic recovery is running out of steam. Even before the launch of tough new restrictions as the second wave of Covid-19 spreads across the country, the rebound from the first lockdown appears to have fallen significantly short.
Figures released last Friday showed that gross domestic product (GDP) in August rose by 2.1% on the previous month – half the rate expected by City economists. Despite a rapid rebound earlier in the summer, and a boost from the “eat out to help out” scheme, the UK economy remains some 10% below its pre-pandemic level.
Earlier this month, the Bank of England’s chief economist, Andy Haldane, said there were two ways to look at Britain’s economic outlook: either as a sharp bounceback, much faster than the worst forecasts made earlier in the pandemic, or as “Chicken Licken” would see it.
Using the children’s story character to warn of a self-fulfilling prophecy in which excessive gloom would lead to weaker growth, Haldane criticised the media for focusing on negative news.
On the upside, the sky has indeed not fallen in. A month-on-month growth rate of 2.1% is barnstorming by historic standards. An economy only a tenth off its pre-crisis peak four months into the deepest recession since records began is a stellar performance. Job losses have not doubled, thanks to furlough, and consumer spending is resilient.
Households and businesses could indeed take comfort from this reading. As Haldane suggests, the country must “prevent healthy caution morphing into fear and fatalism”. Confidence is required if we are to avoid a drawn-out, painful recovery.
But now the second wave of infections and the reimposition of lockdown restrictions is hampering activity. Sir Charlie Bean, a former Bank official who is now a member of the Office for Budget Responsibility – the government’s economics forecaster – believes the recovery is now “on hold” at best.
Faced with this, consumers and businesses must look elsewhere for positive signals. Here, the government has a role to play – one in which it has been severely lacking.
Last week the chancellor, Rishi Sunak, announced an expansion of the job support scheme – a successor to furlough, which is due to end within weeks. But this 11th-hour change comes after many companies have made redundancies in the belief that furlough was ending and not enough would replace it.
The Treasury had been adamant the original scheme would end, with Sunak warning just two weeks ago it was “fundamentally wrong to hold people in jobs that only exist inside the furlough”.
Business groups had called on the chancellor to outline plans for helping firms through local lockdowns as long ago as July, when the prospect of a second wave and the use of regional controls was already a distinct possibility.
At best, the government could have been attempting to paint a sunny picture of Britain’s recovery. As Haldane would suggest, good news can become self-fulfilling. But at worst, ministers appear to have played a giant game of chicken with people’s jobs, refusing to swerve until the last minute.
A longer-term and more consistent approach is required – as in Germany, where wage subsidies are a more permanent feature of the labour market in difficult times.
There are concerns Sunak’s stop-start support schemes could breed greater caution among consumers and businesses than if there were greater certainty. Meanwhile, further problems loom from the lack of progress in Brexit talks – the resulting lack of clarity further undermining Britain’s economic fightback.
At the start of the pandemic, ministers enjoyed an unusual amount of public goodwill: a new government, fresh from election victory, facing an unprecedented global emergency out of a cold blue sky.
A government that has had six months to brace for a second wave but ignored the risks until the 11th hour will find little sympathy. And for the economy, the lack of planning and stability will dramatically hold back Britain’s chances of a swifter recovery.
Cineworld is no hero to zero-hours staff
Sometimes it is hard to know who the real villains are in the movie business. Is it Safin, the anarchist played by Rami Malek in the much-delayed Bond film No Time to Die? Or is it the studio bosses guilty of killing off an anaemic cinema trade by shunting movies such as the new Bond into 2021, so they can rake in more cash?
Cineworld chief executive Mooky Greidinger has played a strong blame game, promising to resume operations when the “studios are able to bring their pipeline of major releases back to the big screen”. So is he one of the good guys?
What kind of business is Cineworld anyway? The pandemic has been a disaster for the screen trade, no question, but Cineworld already had problems, creaking as it was under the weight of more than £6bn of debt. Its multiplexes ride on the coat-tails of glamorous Hollywood while cinemagoers buy tickets and popcorn from staff who are mainly on zero-hours contracts.
Last week these employees were stood down, with Greidinger promising to welcome them back when we are “able to offer you new shifts again”. The approach means they still have a job but one with no pay, and the company has no requirement to compensate longer-serving staff who would be entitled to a redundancy payment.
Greidinger appealed for understanding, telling staff that he had written to the prime minister asking for the original furlough scheme to be reinstated and to acknowledge the “unique situation facing the cinema industry”.
The pandemic has turned the world topsy turvy, but surely it sticks in the craw to seek taxpayer support for wages that even in good times the company itself does not guarantee? Cineworld’s financial mess will have to be sorted out first, but investors and filmgoers should ask more of the UK’s biggest cinema chain.
BA’s 747’s reminded us of unsustainable days gone by
Of the many changes coronavirus has wrought, the hastened departure of British Airways’ Boeing 747 jumbo jets should arguably provoke little mourning. The so-called Queen of the Skies’ days were numbered: too thirsty for fuel to pay its way except on the busiest long-haul routes, and making way for more economical and agile models. With four engines’ worth of noise and fumes, it was a plane that Heathrow’s neighbours are unlikely to miss, and a giant problem from an environmental standpoint.
Yet the sentimental sendoff for the last pair of 747s at BA – which once had the largest 747 fleet of any airline – should not be dismissed as the simple reflex of the aviation enthusiast, or residual jingoism. The planes, “retired” on Friday to airfields in Britain, were designed at a time when humankind’s eyes were on the skies, shooting for the moon; with apposite historical symmetry, one of the 747’s most notable latter-day voyages was to carry a space shuttle on its back.
It survived 50 years in service, and is still thriving in its freight version during the pandemic – an achievement that looks more notable alongside the woes of modern successors, such as Airbus’s shortlived A380 superjumbo, and Boeing’s smaller, grounded 737 Max.
The 747 flew millions of people to explore the world, reaching its peak just before the millennium – a moment of unparalleled recent peace and prosperity, when flying was largely guilt-free and its damaging impact less widely understood.
Such careless, carefree flying was not sustainable. And the experience of coronavirus has made much everyday business air travel now look unnecessary and undesirable.
But millions confined and working from home might have looked wistfully at the television pictures of those 747s in the air one last time. If aircraft engineers can one day build a truly low-emission successor to the jumbo jet, long may a new Queen fly.
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