ALEX BRUMMER: Eye-popping national debt is fine while interest rates remain low, but living on never-never is only sustainable short term
- In the UK, the Chancellor Rishi Sunak is projected to spend £280billion on the pandemic
- Donald Trump has finally put his signature to a bailout package which will pump a further £1.7trillion into the US economy and avoid a government shutdown
- Japan has just added a further £524billion of stimulus to the £1.6 trillion injection it made in the spring
The biggest difference between Covid-19 and previous global economic crises has been the willingness of governments to spend their way out of slump.
The scale of fiscal and monetary injections has been key to averting 1930s levels of unemployment, banking and corporate collapses while also buoying stock markets.
Donald Trump has finally put his signature to a bailout package which will pump a further £1.7trillion into the US economy and avoid a government shutdown.
Taking a hit: The scale of fiscal and monetary injections has been key to averting 1930s levels of unemployment, banking and corporate collapses while also buoying stock markets
It is a curiosity of American politics that Trump and his Democrat critics on Capitol Hill have been on the same side in the latest budgetary dispute, with the President and House leadership wanting to send a cheque for up to £1,500 to every citizen – helicopter money if you like – but the Republicans refusing to go beyond £450.
Here in the UK, the Chancellor Rishi Sunak is projected to spend £280billion on the pandemic, a bill that may yet rise depending on the speed of immunisation rollout.
Japan has just added a further £524billion of stimulus to the £1.6 trillion injection it made in the spring. The EU has been notably slower in fiscal support although Germany, France et al have done much nationally.
Across the trade bloc, Brussels initially approved £676billion of assistance. And while the UK was distracted on the outcome of the EU trade deal the Commission came up with a further six-year £1.6 trillion plan to create a greener and more digitally enabled continent post-Covid.
The consequence of so much of the West rippling its fiscal muscles is eye-popping national debt. That is fine while interest rates remain low. But living on the never-never is only sustainable short term.
As we embrace the UK’s new sovereign status amid the pandemic, tech continues to keep on giving.
UK tech raised a record £11billion in venture capital in 2020 – a bigger number than France and Germany combined. Encouragingly, the investment was not confined to the Golden Triangle of London, Oxford and Cambridge but shared across Leeds, Newcastle and Glasgow too. Jobs may be lost in retail and hospitality but as of November there were 75,000 fresh vacancies in technology. As one door closes another opens.
By Silicon Valley standards the UK may look like an also-ran but there is advantage in artificial intelligence, gaming and fintech which provides reason for optimism if venture capital and training can be ramped up. The UK also needs to ensure that cutting edge UK firms such as Codemasters can develop rather than be sold off at a time of subdued FTSE250 and Aim share prices.
Minister for the Cabinet Office Michael Gove is keen to promote more tech flotations in London. The Hut initial public offering, for all its imperfections, shows it can be done. More are needed but not to the detriment of sound governance.
Much mockery about UK trade deals with dots in the Pacific such as Samoa and European backwater Moldova. Signing up Turkey is a big plus with £18.6billion of trade at stake following deals reached with Japan, Canada, Switzerland and Norway bringing the number of new accords to 46 countries. Next stop for International Trade Secretary Liz Truss? Joe Biden’s Washington DC.