Boris Johnson’s lockdown exit plan is slower, but not pain-free
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No big bang reopening. No promises that might be broken. No immediate prospect of life returning to normal for those businesses most severely affected by restrictions deemed necessary to tackle the Covid-19 pandemic.
That, put simply, is what the government’s roadmap for leaving lockdown means for the economy. Having been burned badly last year, Boris Johnson has decided to take things much more slowly this time.
Not only that, in the early stages of the plan the need to get children back into school and to allow families a limited amount of freedom to socialise have taken precedence. Only later will non-essential retail stores and the hospitality industry be allowed to reopen. It remains an open question whether foreign holidays will be permitted this year.
The government’s thinking is obvious: better to take it slow and steady rather than risk the economic and political catastrophe of a fourth lockdown. The number of new reported cases of Covid-19 is falling but at a slower pace than it was. In some other European countries – the Netherlands and Austria, for example – they have started to nudge up again. Johnson has learned the hard way the moral of the story of the tortoise and the hare.
That said, the government’s approach is by no means risk free. For a start, it means the Treasury is going to have to continue writing big cheques to support furloughed workers and shuttered businesses for a lot longer than Rishi Sunak had planned for at the back end of last year. The roadmap will have a direct impact on next week’s budget, the latest in a series of expensive short-term fixes for the economy.
The chancellor never passes up an opportunity to tell voters that the government has so far spent £280bn on pandemic economic support, but many small businesses still feel neglected, even abandoned. Figures from the Office for National Statistics show that a third of firms have cash reserves of three months or less. A slower pace of reopening means more of these businesses will go to the wall. Inevitably, more jobs will be lost.
CMA’s big tech investigations are welcome
There are plenty of reasons for the UK to avoid a fight with big US tech companies. Downing Street is keen to foster good relations with Joe Biden and eager to attract encourage the likes of Google, Facebook and Apple to boost investment post-Brexit; there is scant evidence that digital retailers such as Amazon are using their market power to rip off consumers.
So, it is all the more interesting that the chief executive of the Competition and Markets Authority, Andrea Coscelli, has used an interview with the Financial Times to announce that the watchdog is to conduct a series of anti-trust investigations into big tech over the coming year.
That news is to be welcomed, because the reasons for investigating the activities of big tech outweigh the reasons for not doing so. One is that consumers are not really getting Google and Facebook for free: they are paying with their personal data. There are privacy issues here.
Coscelli is also concerned that the tech companies are using their financial power to gobble up smaller rivals that they feel pose a threat. Adam Smith, who had strong views about the threat posed by monopolists, would no doubt approve. But investigations don’t necessarily mean action will be taken. The CMA should expect plenty of pushback.
John Lewis must adapt, or face more closures
John Lewis has always prided itself on having loyal customers who were prepared to pay a little more for quality products and one-on-one service from assistants who knew their stuff. That business model has run smack up against a world in which consumers buy more things online and adapting it is not going to be easy, especially at pace. If the reports are true, eight more stores are to close. The prospects for the 34 that would remain would not be rosy.