Bounce back

Report by: Onward

Author(s): Various Authors

July 6, 2020

This latest report from UK think tank Onward looks at how to put Britain on the path to prosperity after coronavirus.

This is a different economic shock to anything we’ve seen in the last 100 years. The source – a virus – is entirely exogenous, forcing Governments to impose lockdowns and social distancing measures. The ensuing economic disruption has been extraordinary, with supply and demand shocks feeding into each other, coupled with significant volatility in financial markets. Consequently, any economic policy response must address and accommodate the unique composition and ferocity of the crisis itself, not just to keep the economy on life support during lockdown but to rehabilitate it and improve its health after it has awoken. This report sets out a strategic plan for tackling some of the most difficult economic headwinds facing the country.

The recommendations are deliberately framed around a number of clear principles that should be at the front of policymakers’ minds as they decide how to bring the economy back to life:

• There’s no off-the shelf playbook. The response must involve a mix of approaches, with maximum agility to respond to evolving evidence and data as more becomes known about the virus and businesses and consumers respond in new environments. Hard ideology should be avoided at all costs.

• Time is of the essence. Where a policy action is justified across scenarios, there is a premium on speed in deciding and executing policies. If young people spend months unemployed, businesses are unable to restructure their debts, or infrastructure and planning approvals are slow, the recovery will be slow and the scars enduring.

• The scale of any policies must match the scale of the crisis but with a relentless focus on improving outcomes – not chasing short-term headlines or tinkering with micro changes that will achieve little.

• We must not waste the opportunity to drive change. As with other crises – as horrible as this one is – we should not waste the opportunity to reform outdated institutions and achieve rapid progress on longstanding problems. This should include delivering faster and further on the promise to level up regional growth and boost the long-term competitiveness of the UK economy.