Sunday Blog 30: Three Dangers: Three Crises: Economy, Covid and Brexit.

Back from holiday and resuming my Sunday Blog, it is hard to know where to start, so full in the doleful menu of misfortune and mishap across the world. But the home front is where this blog lives and there are currently three simultaneous crisis points, buffeting a government seemingly losing its way. I will briefly deal with each separately. For all of them it is something of a wait and see. Things may get better, but on current projections they will first get a whole lot worse.

The Economy.

At the moment there is no certainty on the final nature of Brexit nor do we know when Covid will be brought under some kind of control. So estimates of future economic anything is guesswork and in the context of this blog pointless. But we do know that the costs of Covid thus far are eye watering. One statistic stands out as a marker. Borrowing by the government is now over 1 x GDP i.e. £2 trillion. Against this must be set the total of quantitative easing (government debt owned by the Bank of England). This currently stands at £745 billion. Technically this is held by the B of E, which is at arms length from the government, but the government owns the Bank. And that means that ultimately the government owns that proportion of its own debt.

Nevertheless we are now entering uncharted waters in modern times. Much more money will have to be printed before the economy picks up enough to to provide the tax revenue to pay the nation’s running costs. This will require the careful balancing of inflation/ currency value/ interest rates/borrowing and printing. It cannot be done without some tears for sure. If done well it will cement a strong recovery from the current nadir. But if mishandled by a Treasury hooked on irrelevant dogma about good housekeeping, it could precipitate economic mayhem.

Covid

Cases are on the rise big time. The R number is has passed 1. Hospital admissions, while still a fraction of the initial crisis, are going up. The mandatory Rule of Six comes into effect on Monday. Widely supported by medical and actuarial scientists, modellers and those on the front line of the pandemic battle, the usual gang of Tory right wingers are grumbling. It is obvious that something not good is coming down the track. The race to sort out a vaccine, track and trace, as well as improved treatment of those Covid sufferers who become really ill and need help, is well and truly on. Broadly commentators,  scientists and medics give a measured analysis of the challenges and potential solutions. Sadly when the government speaks it is often hard to extract facts from fantasy. Especially when the prime minister is doing the talking.

Brexit

This is now a big mess. The origins of the mess are Boris signing a Withdrawal Agreement which he either had not read or did not understand. Maybe both. For those who did read it, I am one such, it was obvious that if no final trade agreement were reached, there would be a border down the Irish Sea. It is beyond comprehension why this was not understood. Or was it? Was the plan always to dump it? With this unscrupulous gang calling themselves a government, anything is possible. It seams beyond credibility that they did not get correct advice from expert lawyers and officials at the time.