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  1. International
19 December 2020

Boris Johnson’s belated U-turn over Christmas needs an economic stimulus to match

If the new restrictions are not to have disastrous economic consequences, Johnson must radically change policy. 

By Stephen Bush

A third of England, including London, will enter a new fourth tier of tightened lockdown restrictions, while England’s Christmas easing period has been slashed to just one day (the 25th) in areas in tiers one, two and three, and scrapped entirely in tier four. Wales. meanwhile, will enter lockdown at midnight. 

Boris Johnson’s stated rationale is that the new, more rapidly-spreading mutation of Covid-19 (it is not more deadly but it does spread quicker) is what has forced his hand. Which, you know, we have to accept may be true: that the real and obvious risks of proceeding with the Christmas unlocking, which have been clear since November, let alone since last week when London entered tier three, were not alone enough for Downing Street to change approach.

I think it’s more likely, given everything we have seen thus far, that Johnson has done what he has done many times during this pandemic, and abandoned his plan A of siding with the Chancellor, Rishi Sunak, who has consistently advocated keeping the country and the economy as open as possible, and opted for plan B: listening to his Health Secretary, Matt Hancock, in the face of growing pressure on the country’s healthcare capacity.

The U-turn will leave the British economy in need of a new and more generous stimulus package. The tier 4 restrictions directly hit 17 million people but, because they affect the biggest single engine of the British economy, will indirectly touch many more, not least because the Christmas period is so important to many businesses. The economic support measures introduced thus far are designed to help businesses meet their wage and property costs – but they are not sufficient to allow businesses to recoup their costs for stock, which they may now not sell, or to reimburse their suppliers. The knock-on effects, unless Sunak opens the government’s chequebook, will be severe.

The problem is that Johnson has consistently drawn back from direct confrontation with his Chancellor and as a result, for much of the year, the UK has had a disastrous policy mix: an economic support package based around easing restrictions, and a lockdown package based around tightening them. If the new tightened restrictions are not to have disastrous economic consequences, Johnson will need to change his political approach and not just his coronavirus strategy.

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