There is little chance of the economy staging a full recovery by the middle of the decade, let alone by Christmas, as Boris Johnson believes is possible. Speaking with the optimism of a first world war general, the prime minister said on Friday that most restrictions on business activity would be lifted by December. This, he intimated, meant that for much of the population there will be a return to pre-coronavirus ways of working by the end of the year. He foresees workers by the million travelling to their workplace by public transport, while their children attend school every day and universities absorb hundreds of thousands of young people. His optimism was only tempered by the prospect of local lockdowns, which can now happen within hours after he gave councils greater powers to close specific premises affected by Covid-19. After months of suffering one policy misstep after another, there was every reason for a note of despair in the response from some business leaders. They were polite, but desperate for the government to lay down clear ground rules rather than leave it up to them to decide what constitutes a safe environment. They don’t want to spend vast sums opening up facilities only to close them again when a group of workers tests positive. Yet experts say that is just what is likely to happen when a mix of casual, part-time and full-time staff start travelling back to their workplace on packed buses and trains. Johnson wants city centres to hum with activity. It’s not clear how that happens when companies, fearing the costs of renewed lockdowns, opt to keep their white-collar workers at home.
No wonder that the boss of the British Chambers of Commerce, Adam Marshall, has called for tax breaks on the costs of reopening businesses in his response to Johnson’s announcement. Marshall was one of the most vocal in calling for “crystal-clear official guidance” before employers could bring staff back in large numbers. As we know, crystal-clear guidance is not on the menu. Schools have asked for the same clarity as businesses seek. So have universities. “Do what you think appropriate,” comes the answer from one minister after another. “See how it goes.” The cabinet has proved incapable of clear leadership at every stage and that is not going to change. There is some activity within the great offices of state, but much of it is devoted to plotting how to remake the economy under instructions from Dominic Cummings, who doesn’t much like dull, slow-moving Britain and wants it to be more exciting. The problem with waiting for the Cummings revolution and leaving the emergence from lockdown to individual companies is that economic activity will remain stuck in second gear. As this newspaper has reported, economists from across the political spectrum agree it will take greater trust in plans to ease the lockdown and huge investments by government to bring the economy back to life. Free-market supporters have joined dyed-in-the-wool Keynesians to call for a step up in infrastructure spending, and not just to boost jobs in construction and engineering. They know the visible signs of an economy getting back on its feet are vital to creating the “animal spirits” of entrepreneurialism and investment that drive growth. Last week, sadly, provided relentlessly bad news on this front. The GDP growth figures for May showed only a 1.8% bounce-back from the near 26% fall of the previous two months. This revealed a distinct lack of impetus from the private sector as consumers, for so long the driving force of growth, remained reluctant to spend. Later, the Institute for Fiscal Studies unearthed figures showing the government’s £30bn boost to transport and infrastructure included £5.5bn taken from projects it had cancelled and £10bn of recycled cash overall. These cancelled projects in many cases addressed Britain’s climate challenge, mostly in the largest towns and cities. Without them, there cannot be a return to where GDP was before the crisis within agreed emission limits. It takes years to fashion such projects before they are shovel-ready; reviving them will take time and money. In other words, they have a shelf life, and once their sell-by date has passed, much of the preparation must be done again. Also, many schemes in London are paused, caught in a funding tussle between No 10 and the city’s mayor, Sadiq Khan. A distaste for local authorities more generally impedes developments across the regions, as shown by moves by housing seceratry Robert Jenrick to centralise planning powers. This mix of dither and delay over coronavirus rule-making, of revolutionary Whitehall makeovers and plots against mayors will prevent even the most enthusiastic workers and business people from reviving the economy before Christmas. It will take much longer.