Boris Johnson’s roadmap on Monday was an exercise in trying to keep most of the people happy most of the time. With doves urging greater caution, alongside hawks including the ERG, whoops CRG, demanding Covid be let rip through society.
The roadmap is only the first half if we use a football analogy, and the second half is now wholly dependent upon a sterling performance from the chancellor.
The chancellor like the PM will similarly be under pressure via intense lobbying from the hawks and doves. The trajectory of pressure from lobbyists will remain, with doves wanting more support and hawks less.
While the trajectory retains its status quo, the objectives of the hawk’s takes a 180 degree turn. Their reasoning for wanting Covid to be let rip is pure political ideology, they want business support reduced and getting businesses open sooner would aid them in their goal.
Mark Harper, Chair of the CRG was extremely vocal in the days and weeks leading up to the PM’s roadmap, imploring Boris Johnson to open up as much as possible as soon as possible. In the run up to the budget, his silence on extending support for the same people he was trying to ‘free’ is deafening. Harper’s CRG colleagues are similarly and unanimously quiet.
The doves who urged caution are now maintaining their position and activity, lobbying for existing support to be both maintained and increased. Their job is being made easier by the opposition clearly on the side of increased support also.
Much of the increased support being called for is both achievable and sustainable for the chancellor. Despite unforeseen levels of public borrowing and spending this does not present fiscal problems for government. Interest rates are at record lows and most economic forecasters expect them to stay that way.
The gradual reopening of hospitality can only succeed if the scope, scale and timelines of reopening are matched by economic support from government to do so.
Each reopening requires substantial capital expenditure while capital reserves for most hospitality businesses are close to exhaustion. This applies to big, small, and all in between businesses equally. Only this week we saw Mitchells & Butlers suspend payments to its staff pension fund ahead of seeking £350 million in liquidity through emergency fundraising. Many others are in similar dire straits needing access to capital in order to reopen with any chance of sustaining their part in the PM’s roadmap.
There is undoubted difficulty for the chancellor in trying to predict UK economic and fiscal direction of travel in the years ahead. If optimistic and applying a view that harm from the pandemic to businesses is temporary, an increase in government debt burden can be absorbed through low interest rates and long maturity dates in UK debt stock.
The PM on Monday was probably more influenced by the doves, let’s hope Rishi takes similar heed.
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Hospitality & Catering News: Improved second half performance required from Rishi, aided by heeding doves. – 25 February 2021 – Improved second half performance required from Rishi, aided by heeding doves.
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