Speaking in the West Midlands on Tuesday, Boris Johnson unveiled the broad outlines of his strategy to tackle the economic fallout of the coronavirus pandemic.
The Government’s unwillingness to issue an earlier lockdown at the end of March suggested their fear of the economic reverberations that a forced closure of retail, restaurants, and offices would give rise to. Now, in the wake of the Government’s gradual easing of lockdown measures, the economic outlook is bleak.
Mr. Johnson has made no effort to conceal his penchant for Winston Churchill. In June, Johnson issued a strong statement condemning the actions of protestors who had vandalised the wartime leader’s statue because of his objectionable racial beliefs. Johnson has also looked to imitate Churchill’s rhetoric by speaking of a ‘war against the virus.’
But this time, the Prime Minister has looked across the Atlantic for inspiration. On Tuesday he attempted to invoke the spirit of the great twentieth-century president Franklin D. Roosevelt to sell his blueprint to reinvigorate the economy to the public. The Prime Minister was keen to sell his strategy as a ‘New Deal’ for the British people. Is there any merit to this audacious claim?
There is no doubt that the Government will have to navigate a challenging economic situation which will bear at least some similarities with the situation faced under FDR’s presidency. Yet, a comparison of the two crises seems rather farfetched.
Mr. Johnson highlighted the fear created by the ‘vertiginous drop in GDP’ with it reportedly falling by a hefty 20.4% in April. Moreover, an ONS report detailed that the UK economy contracted by 2.2% between January and March which is the biggest economic contraction in 41 years. Yet, in contrast, after the Wall Street Crash of 1929 worldwide GDP fell by approximately 15% and GNP in the US fell to a meagre $590m. Whilst some unsettling comparisons between the crises can be made it would be erroneous to characterise the looming economic downturn as a ‘Second Great Depression.’
Furthermore, it is generally accepted that Roosevelt’s New Deal relied heavily on Keynesian deficit spending which was hoped to kickstart the economy by boosting confidence and ‘animal spirits.’ In turn, it was hoped that jobs and business would start to pick up with this increased investment. FDR spent millions on public works schemes and job creation programmes through his alphabet agencies such as the Civil Works Administration (CWA), the Public Works Administration (PWA) and the Civilian Conservation Corps (CCC). Has the Prime Minister adopted a similar approach?
Mr. Johnson has certainly made it clear that he will not revert to the unpopular austerity measures practised by former Conservative Chancellor George Osborne. Instead, on Tuesday Johnson pledged to ramp up government spending, outlining that £5bn would be allocated to infrastructure projects, £15bn to the education sector by 2023 and that he would deliver on his election promise of 40 new hospitals. It sounds like a bold strategy.
Many critics have questioned whether the Prime Minister’s actions go far enough. They have pointed out that the great deal of public works projects that Mr Johnson highlighted in his speech on Tuesday had already been included in the Conservative Election Manifesto. This begs the question as to whether the Government is truly instigating a radical response to this crisis? Ultimately, the proposed £5bn is a mere drop in the ocean, amounting to less than £100 per person. This won’t resemble anything close to FDR’s spending of 40% of the national income on the various alphabet agencies he set up.
The Prime Minister’s call for the nation to ‘build build build’, expected to be followed by more familiarly Conservative long-term austerity, may on the surface seem like a sensible remedy to the economic effects of the pandemic. Yet many are already asking why the Government isn’t intervening further? In any case, Johnson’s plans to get the economy moving again seem far from ‘Rooseveltian’.