Commentators have put the 27,000 or more deaths in this country attributed to the virus so far in the context of the 60,000 civilian deaths recorded during the Second World War. It’s bad enough. But I wonder how many people know that during the 1918-21 flu epidemic of 1918-21, which followed the First World War, the estimated loss of life in this country was, well, 250,000?
By the way, I think it’s worth mentioning that, until the start of the coronavirus plague, the impact of Spanish flu in this country had barely seemed to manifest itself in the consciousness of subsequent generations. The First World War itself? Yes. The great Depression? Of course. Spanish flu? Isn’t that something that happened in Latin America – Love in the time of cholera?
By drawing attention to the parallels between the economic consequences of the Spanish flu and the coronavirus, the National Institute for Economic and Social Research has done a great service. In May Economic review, it calculates that production (gross domestic product) will drop by something between 15% and 25% during this quarter from April to June, due to the painfully obvious impact of the blockage on economic activity that we see Everything around us. This compares to a drop of 12 to 15% in the second quarter of 1921.
But in 1921 production recovered by a similar magnitude – 12 to 15% – in the third quarter, and the NIESR assumed that, as things improved, a recovery in the second half of this year could mean that the real reduction in GDP this year could be around 8% – still troubling. However, the drop could have been 10% without the relief from the leave and other measures judiciously unveiled by the Chancellor, Rishi Sunak, and the Bank of England. Despite this, unemployment is expected to reach 10% by the end of this year, and the innocent victims of the economy’s deadlock or repression are already struggling.
Whichever way you look at it, it’s a calamity. What makes it all the more reprehensible that one of the first announcements the Prime Minister made after his return was that there was no way to extend the timetable for our complete withdrawal from the EU, whatever come.
Well, a lot has already happened. International Monetary Fund calculates Brexit without a deal – which Johnson and Cummings are headed for – would add an additional 5% permanent loss to UK GDP, in addition to permanent damage from the virus, which the NIESR puts at 800 billion pounds, or about 10% of GDP. Citizens and businesses across Europe are torn by uncertainty about the impact of Brexit.
I am well aware that these macroeconomic references to GDP do not mean much to ordinary people. But they should. One of the reasons the NHS was so ill-prepared for the disaster – which should not underestimate the heroic efforts that doctors and nurses have made since it struck – is that the NHS required an increase 4% of expenditure per year after 2010 simply to cope with the cost of new technologies and the aging of the population; but it has been granted a miserable 1% per year by Austerity Osborne.
People now hope that Johnson, after recovering from his near death experience, wants to say what he says about the value of the NHS. My good friend historian Lord Hennessy, always generous in spirit, spoke to the BBC of a “new Boris”.
I wonder. His former boss at Telegraph, Sir Max Hastings, said: “He is a much more ruthless and frankly meaner figure than the public appreciates. I wouldn’t take Boris’s word to find out whether it’s Monday or Tuesday. He sent honest people back to his closet and wrapped it up with right Brexiters.
In what context, I will follow with interest the progress of the relatively new chancellor. He is doing his best to do the right Keynesian thing with the economy, and has realized the importance of the state, having clearly listened to his Treasury advisers. The latter are not natural spenders, but experience a calamity when they see one. They also know, or should know, that concerns about heavy borrowing are exaggerated when there is a counterpart to increased savings from a public whose spending possibilities are limited by repression.
Sunak should now also ask his Treasury officials if he should reconsider his support for Johnson and Cummings for Brexit.