COVID-19: Financial recovery more likely to be L shaped rather than seeing immediate bounce back - expert comment21 May 2020
Prof Adrian Bell, Chair in the history of finance at the ICMA Centre, the University of Reading said:
"Rishi Sunak now concedes that there will not be an economic bounce back, and that we are beginning the worse recession we have ever seen. The Chancellor is also acknowledging at long last that there are no hopes for a V shaped recovery - we will have to see what other letter he may now latch onto - U, W or even as is becoming more likely L.
"The warnings that this could never be an immediate V shaped were there from the beginning of the lockdown. To admit to this now shows either a lack of planning, or more likely deliberate withholding in order to keep the lockdown secure.
"Many of the problems now faced by the Treasury were caused by the ’no-strings’ bailout by the furlough to multinational fast food and fast fashion company. For the last 8 weeks we have had a two-tiered unemployment benefit system, working to the advantage of multinational companies and funded by the taxpayer.
"Another approach would have been to have immediately introduced a safety net Universal Basic Income (UBI) for all who may have been made redundant during the lockdown. This would have passed the risk and the immediate costs of downsizing and redundancy onto the private sector. It would also mean that the country would have had a lower debt burden and the UBI would mean there would now be just a equitable one tiered unemployment system. The savings would have then also allowed the UK to maintain the UBI for the foreseeable future.
"It is certainly confident of the Chancellor to repeat his mantra that he cannot save every job or business due to the Covid-19 pandemic. He fails to recognise that it is not the pandemic that has brought recession to the UK economy, but the treasuries own policies underpinning the lockdown."