Chancellor faces tough job as virus fears grow
Sajid Javid never got to deliver a Budget, and now his successor will this week unveil one of the most important in decades. Wednesday’s statement was meant to be a showpiece for a government determined to “level-up” the economy and flex its newly-won Commons majority.
While ministers are still hoping to regain some political initiative from the Budget, it will be overshadowed by the global spread of Covid-19 — the effects of which are now gripping Europe and much of the rest of the world.
Italy has quarantined 16m people in an act of executive authority surely unprecedented in peacetime. Neighbouring Austria has warned that other European states will inevitably have to adopt similar measures in the coming weeks or months.
If this sounds overly dramatic, consider that Germany now has more confirmed cases of the virus (900) than China did when it rolled out its travel restrictions to 56m people on 25 January.
Little wonder, therefore, that Boris Johnson will today channel his inner Churchill with a call for Brits to “play their part” in combating a global health emergency. The economic consequence of this outbreak will be severe.
The best we can hope for is that it will also be temporary. Debate rages over how central banks can (or should) respond. The decision of the US Federal Reserve to implement an emergency rate cut (for the first time since the collapse of Lehman Brothers) was intended to reassure markets but appeared to have the opposite effect.
While all eyes are on the Bank of England’s next decision, it falls to the chancellor to consider how best to help businesses, sectors and workers caught up in the economic shockwave unleashed by turmoil abroad and growing panic at home.
The chancellor’s task will be to balance, in both style and substance, his response to a crisis with a valid desire to focus on life beyond it. Normally, a Budget is an opportunity for governments to champion their successes, toast the wisdom of their policies and herald the dawn of a new chapter, but in the current climate such an approach could backfire.
Expect a more sober statement, cognisant of the scale of the emergency and of the public’s growing concern. Of course, there is a future beyond this scare, and the chancellor was right to stress that “we will get through it” — but until we do, defending Tory gains in Labour’s former heartlands may take a backseat to defending the entire country.
Main image: Getty