Another crisis wasted

At El Alamein in 1942, British forces secured their first military victory of the Second World War. Winston Churchill assessed that Britain and its allies had ‘perhaps’ just reached the ‘end of the beginning’ of the war. But that didn’t stop him and other Western leaders starting to plan for life after the war. In Britain the government’s Beveridge Report was published in November that year, paving the way to the expanded welfare state that became a hallmark for the postwar domestic settlement. Less than two years later, with Allied armies only weeks into fighting their way across Europe and still heavily engaged in the Asia-Pacific theatre of war, their countries’ representatives convened in New Hampshire’s Bretton Woods. There they charted out what became the postwar international economic and monetary architecture that operated for the ensuing quarter century.

These ambitious initiatives remind us that huge crises, such as our coronavirus pandemic, used to be seized as opportunities to undertake radical longer-term planning. Judging by this week’s UK Budget package, this is not the case anymore. Times like this demand bold economic thinking. Rishi Sunak has squandered that opportunity.

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The economic transformation we need

One legacy of the pandemic has been to bring government activism out of the shadows. Whether you criticise or support how governments managed the pandemic, it is indisputable that their actions and inactions were of huge consequence to our lives and to the economy. So far, though, this acknowledgment has yet to unmask the myth that the past 40 years has been a period of state economic inactivity. Until this is understood, the current debate about state economic intervention will be misleading, when what we really need is a state-led shake-up of the failing status quo.

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Please, Rishi, stop evading the problem

There is an animated debate going on about post-pandemic economic policies. Centred in the US, the discussion has implications for the forthcoming Budget in Britain and for decision-making across other advanced economies. As he prepares for the 3 March Budget, chancellor Rishi Sunak needs to get real about Britain’s economic torpor.

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Don’t blame Covid for economic devastation

It is unhelpful to present the economic disruptions over 2020 as costs of the pandemic itself. Claims that it is the virus, and not the restrictions, that is causing today’s devastating economic damage to production and jobs are misleading.

Understanding better how the economy is being hit is important for several reasons. A firmer grasp of all the costs arising from lockdowns and other official social restrictions is necessary for sound policymaking. Making decisions based on epidemiological models without a broader assessment of the costs – social, health and economic – and of how they have arisen is a reckless approach from political leaders.

Moreover, these other impacts from the pandemic measures are helpful in assessing the lessons to be learned in preparing for and managing future pandemics.

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The tyranny of the EU’s state-aid rules

The esoteric area of European Union state-aid rules has become a focal point in the dragging negotiations between Britain and the EU. Alongside access to British fishing grounds, the question of the UK continuing to adhere to the EU’s rules for state aid is reported to be the big sticking point jeopardising an agreement on future trade terms. On top of this, the same issue of state-aid rules is prominent in the furore over the publication of Britain’s Internal Market Bill. The European Commission’s condemnation of the Conservative government’s proposals to override parts of last year’s Withdrawal Agreement spotlighted the UK’s obligation to notify Brussels of any state-aid decisions that might affect Northern Ireland’s goods market. Why have the state-aid rules attained such importance in the fraught UK-EU relationship? Why are they so crucial for the European Commission (EC)? Read the full article here.