Just as the Soothsayer in Shakespeare’s Julius Caesar cautions the would be emperor, beware the Ides of March (a Roman deadline for settling finances) Lucy Powell MP has issued a similar warning to The Chancellor.
Powell cautioned that financial support originally designed for three months is now inadequate and without more from The Chancellor, and soon, further damage to the economy is imminent.
Powell’s points are made well and can be seen and listened to, as can The Chancellor’s reply in the tweet below. Sunak seems limited currently to party lines rather than his own thinking, which hopefully mask his intentions.
Business support designed for 3 months is now deeply inadequate for 12/18 months with debts and deferrals mounting and the holidays coming to an end, all at the same danger point in April. Today I urged the Chancellor not to pull the plug in one go and see thousands go bust. pic.twitter.com/JT5bvk2Xlm
— Lucy Powell MP (@LucyMPowell) January 26, 2021
Rishi Sunak has invested in the UK economy on a scale never previously seen. On 25 November, the Office for Budget Responsibility estimated that borrowing would be £394 billion for the current financial year April 2020 to April 2021.
Much of the money borrowed was and is being used to support UK businesses, and this can be seen as an investment in the UK economy. Justified in part by the need for those businesses to remain viable and pay taxes in the years ahead.
As a successful investment banker prior to entering politics, the necessity for those investments to be maintained will be better known to The Chancellor than most. But his hands are somewhat tied by the need to keep his Cabinet colleagues on side. The Conservative Party not being known as fans of high public borrowing.
Like many aspects of government decision making at the moment, rocks and hard places come to mind. For Sunak if he doesn’t extend and increase economic support for businesses they will fail, and the March budget for many is too long to wait.
If support does not come in time, before the budget, much of the investments made to date will return a loss. The borrowers by that point being ex-businesses unable to repay the support funds in productivity and tax returns.
If the UK economy sees large scale public bad debt, private finance will not be looking to fill any gaps and the wider economy will suffer further.
So, it seems, and this may be a tad optimistic, the bigger part of The Chancellor’s job right now is to provide a lesson in economics for his Cabinet colleagues.
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