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23 June 2020updated 24 Jun 2020 10:44am

Why restoring trust is the most important economic challenge the government faces

Reopening could be hit by two blows: a second spike in infections, or the fear of a second spike in infections.

By Stephen Bush

Bars, restaurants, pubs, cinemas, museums, art galleries, places of worship, libraries, hotels, B&Bs, theme parks and holiday homes are among the places that will be able to reopen in England from 4 July, with the two-metre social distancing rule to be halved to one metre, the Prime Minister has announced.

Underpinning the measures is the government’s belief that the novel coronavirus’s spread has been adequately suppressed, allowing it to safely devote greater attention to reviving the British economy.

There are three problems, however. The first is that the United Kingdom may not have successfully flattened the spread of new cases and that the reopening triggers a second spike in infections. The second is that British people may not believe that the UK has successfully flattened the spread of new cases and therefore “reopening” merely triggers wave after wave of bankruptcies and closures. The third is that, due to the continuing closures elsewhere, the economy revives, but merely in a way that changes the trajectory of large parts of it from “bankrupt in two weeks” to “bankrupt in six”.

On the first: ultimately it’s a known unknown. There are serious questions about the UK’s ability to test, trace and isolate new cases of coronavirus. But the data on the rate of new infections continues to be positive and those very serious problems may, as it happens, prove immaterial. I’m not saying they don’t matter and don’t reveal concerns about British state capacity and the competence of ministers: I’m just saying they might not necessarily cause a second spike of infections.

What about that second problem – that British people may not think that it is safe to reopen, and as a result most of these new freedoms will go unused? This is why the various displays of government incompetence and the loss of trust seen in the polls are troubling, not only from the perspective of card-carrying Tories, but in terms of the overall effort to revive the economy. It’s again, a known unknown. We don’t know if people’s doubts about the government’s competence will cause them to think: “a hotel? I’ll pass, thanks.” This is why changing the mood music around the administration’s handling of the pandemic, and the government generally, is not only an electoral priority for the Conservatives – it is also a core part of reviving the economy. 

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That part is, at least, in the government’s control. What it can’t control is differing perceptions of risk, and whether or not people will want to seize the nominal benefits of reopening. You may be happy to go to the pub but not a restaurant, or vice versa. But if half of the people who go to your favourite restaurant decide they’re happy to stay at home or a third of the people who go to your local bar decide that they’ll keep drinking in the park or at home, particularly now they can have one other socially distanced household over, then your local is going to close down. 

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That speaks directly to the third problem – while it’s sensible that the government is not reopening everything at once, and many of the organisations that are still staying shut, such as theatres or swimming pools, are doing so because they are more dangerous vectors of this particular disease, those shuttered attractions are big drivers of custom to many of the places that are reopening. Every pub that serves office workers has big, perhaps unfixable problems. Every restaurant that lives off theatregoers has serious, maybe existential challenges to remain viable.

I’m not saying that we should be relaxed about the medical risks of reopening. But I am saying that we should be aware that it is equally possible that the government is reopening at about the right pace, in about the right way: but that the economic challenges prove insurmountable just the same.