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Will Wednesdays stimulus work?

July 10, 2020 1:32 PM
ifsWe don't profess to be economists but initially we were impressed by the scale of the intervention (£30bn) to kick start the economy. It was of a size similar to that of Allister Darling after the financial crash in 2008. There were the inevitable gimmicks such as the £10 off food vouchers which are costing three times the amount of summer school dinners that had to be shamed out of the Government a few weeks ago but you could see that the package was aimed at getting customers back into the hospitality sector and encouraging businesses to retain workers
However the Institute for Fiscal Studies the UKs leading tax and spending think-tank has criticised the policies as badly timed, poorly targeted and likely to do little to stop unemployment from rising. It said most of the £9.4bn allocated for the government's £1,000 job retention bonus scheme - to incentivise employers to take back furloughed staff - would be spent on jobs that were already safe. In other words many companies will take the £1000 subsidy on furloughed workers they already planned to take back
It also thought other flagship measures including a VAT cut for hospitality firms and an eating out discount scheme had been launched too soon, given the ongoing risks from Covid-19 and social distancing measures preventing diners from visiting restaurants, pubs and cafes. The biggest factors keeping people away from restaurants and hospitality businesses such as hotels was not the price of eating out, but the continuing health risks of Covid-19 and physical distancing measures used to restrict capacity at eateries, it said. In other words the absence of a working track and trace system means a lot of people are avoiding restaurants etc because , despite the measures being taken on safety they are not convinced the risk is worth taking. Early figures suggests takings in pubs were 50%down on normal in the first week after lock-down and that included the much hyped "super Saturday"

Responding to news that NHS Test and Trace has only reached some 70% of 'close contacts' of people who have tested positive for COVID-19, Liberal Democrat Health, Wellbeing and Social Care spokesperson Munira Wilson said:

Yesterday the Chancellor offered us discounts to eat out, but many people will be too worried to do so. That's because the NHS Test and Trace is still failing to reach large numbers of people, despite costing taxpayers some £10 billion in private contracts.

We need to test, trace and isolate every case of COVID-19 to keep people safe. The public need to have confidence that NHS Test & Trace is fully functional. With the figures failing to improve week to week, it's clear there is still a lot of work to do.

The Government must act now to ensure that this system is as comprehensive as possible to make sure no-one slips through the net. Any failings in this system will put public health at risk and jeopardise our chances of a rapid economic recovery.