Yes, We Can Afford A Second National Lockdown
The past few days have seen feverish debate over the merits of different proposed lockdowns.
Some are advocating a local approach. Some a regional approach. Others a national “circuit breaker”.
Alongside this is justifiable concern about the impact that a lockdown will have on the economy and the public finances.
According to various sources, the message from the UK government to local leaders has been clear “there is no money”, so you will just have to accept the rules as they are.
This has created an understandable backlash. People are being asked to choose between their health and their livelihoods. This is not sustainable.
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Some politicians are concerned about the scale of borrowing that has been required to tackle Covid-19. The Office for Budget Responsibility estimates that the UK could borrow £391bn to tackle this pandemic, which sounds like a huge amount of money. And it is.
Sir Edward Leigh, a Conservative MP, summed up this point for many earlier this week in Parliament when he said that we are “going bankrupt as a nation” and we cannot afford further restrictions.
When you interrogate the figures, however, these fears are simply not grounded in evidence. Yes, the UK’s national debt is sitting at over 100% of GDP due to the financial crisis and now Covid-19. But this is nowhere near the UK’s historic peak of 250% after the Napoleonic wars or the over 200% after the Second World War.
In both instances, the UK was able to grow and pay down the debt over time. This track record has made the UK a safe haven for investors and is part of the reason why we can borrow at cheap levels – currently around half a percent.
Anyone who owns a mortgage will tell you that the key is not the total amount you have borrowed but the repayments. Fortunately for the UK, the...
