The UK economy is heading for the ‘recession to end all recessions’ with GDP predicted to plunge by nearly one third this quarter — the worst crash in 300 years.
According to Chancellor of the Exchequer Rishi Sunak — quoted in the Mail — it is ‘very likely’ that the UK is already in the middle of a ‘significant recession’.
No shit, Sunak!
Traditionally the duty of the Chancellor of the Exchequer is to act as a brake on the otherwise limitless spending aspirations of his government.
Not this Chancellor, though. Instead, he appears to imagine that he has discovered a magic money tree and has announced that he will use its fruit to sprinkle free cash on the British population till at least as late as October.
That’s how long, he announced this week, he intends to go on paying the so-called ‘furlough’, whereby a significant chunk of the working population — seven and a half million and counting — can remain in lockdown but have 80 per cent of their salaries covered by the government, up to a maximum of £2,500 a month, in order to preserve their jobs for when the economy recovers.
Can anyone see what the problem is here?
It’s quite an obvious one and I’m quite surprised that Sunak — with his PPE degree from Oxford and his stint at Goldman Sachs — can’t see it.
Answer: magic money trees don’t exist. They are a figment of the imagination of socialist economists. A government can only spend what it takes in taxes, what it borrows, or what it pretends to conjure from thin air by debasing the currency through processes like quantitative easing.
None of that money that Rishi Sunak is splashing around like a drunken sailor on shore leave is his money or even the government’s money: every last penny of it is either your money — or the money belonging to all those future generations who are going to be on the hook for Sunak’s profligacy for many decades to come.
When governments borrow on as epic a scale as Sunak inevitably must, it takes generations for the money to be paid back.
For example, it wasn’t until 31st December 2006 that Britain paid out the last instalment on the £21 billion it had borrowed to pay for World War II.
That £21 billion — obviously, it would be considerably more if adjusted for inflation — sounds like peanuts when set against Sunak’s current spending plans.
Just the furlough scheme alone is costing £8 billion a month.
According to the Telegraph, a confidential Treasury assessment of the coronavirus crisis estimates the total cost could be as high as £300 billion. In the worst-case scenario they quote, it could be as much as £1.19 trillion over five years.
Where is that extra money going to come from?
The options being discussed, according to the Telegraph, range from tax rises — including an increase in VAT — to a public sector pay freeze.
What doesn’t appear to be on the table, oddly, is the pointless, environmentally destructive £100 billion-plus HS2 project. Nor has the government made any mention of its biggest white elephant project of all — its mission to make Britain Net-Zero by 2050.
Treasury analysts are also increasingly worried that instead of having a ‘V-shaped’ recovery — where the economy bounces back quickly — Britain is more likely to have an ‘L-shaped’ one where everything stagnates.
But it’s hardly surprising that this is a likely proposition when a) Boris is keeping Britain on near-endless lockdown (despite increasing evidence that it will make little difference to Coronavirus’s trajectory) and b) the government is continuing to pretend that it is green business as usual.
No government which took the impending economic disaster seriously would be wasting scare resources on Net Zero nonsense: artificially driving up the cost of energy by embracing renewables just makes business less competitive and the cost of living more expensive.
Britain is heading for economic disaster. And what’s most depressing is that this disaster is almost entirely of this allegedly Conservative government’s making.
The Chancellor could have saved billions by keeping furlough repayments low — giving people an added incentive to get back to work rather than cowering at home cushioned by the Nanny State.
He should also — as a member of the Quadrumvirate currently running Britain — have the voice that demanded, insisted, that the lockdown was unsustainable.
“If you want to destroy the economy, fine,” he should have said to Boris Johnson, Michael Gove and Dominic Raab, “But not in my name, you don’t. I’m resigning.”
It would have been the only right and principled thing for a Chancellor to do in this unparalleled display of governmental stupidity.
Rishi Sunak has failed the test. Children as yet unborn will be paying for his cowardice and his profligacy, for many years to come.
At least people born after 1945 still servicing Britain’s war debts knew that the money had gone to the good cause of defeating Nazi Germany and Japan.
But what exactly is the point of all this money we’re squandering on the lockdown and the broken public healthcare system?
And will anyone ever take the rap if and when the public inquiry discovers that it was all a massive waste?