MAGGIE PAGANO: The private sector knows how to get us out of the lock


Britain’s public finances are in disarray. Debt exceeds the size of the economy after the government borrowed a record amount in May to save the country from collapse.

The latest figures from the Office for National Statistics show that the UK borrowed around £ 55.2 billion in May, about nine times more than the same month last year.

This means that the deficit – the difference between spending and tax revenue – for April and May is around £ 103.7 billion, up $ 87 billion from the same period last year.

The latest figures from the Office for National Statistics show that the UK borrowed around £ 55.2 billion in May, about nine times more than the same month last year.

The latest figures from the Office for National Statistics show that the UK borrowed around £ 55.2 billion in May, about nine times more than the same month last year.

If Chancellor Rishi Sunak continues like this, he will have had the largest public sector deficit since World War II.

Total debt at the end of May is down 2,000 billion pounds, an increase of one fifth from the same period last year. This represents 100.9% of GDP, the first time that it has been exceeded since 1963.

The numbers are staggering but shouldn’t surprise you. Government revenues fell by almost a third in May to £ 40.7 billion while the country was in deep freeze.

Tax revenue from PAYE VAT and corporate tax collapsed when people stopped spending and businesses gave up on tools.

Sunak has rightly injected billions into the economy through emergency loan and job support programs helping companies find and keep workers: £ 29 billion to be precise.

Whether the hardness of the lock is necessary will be discussed for decades. But once that decision was made, borrowing at historically low interest rates to support 9 million jobs and livelihoods was the right thing to do.

So how should we care about the latest figures? Andrew Sentance, a former member of the Bank of England’s monetary policy committee, doesn’t say too much.

He underlines the ratio, since the British public debt has hovered around 95% of GDP since 1700 and reached 250% after the war.

Being able to pay off the debt is the most important thing rather than worrying about the actual number.

What matters now is that the government pulls the right levers for the recovery and how Sunak balances budgetary and budgetary policy with its mini-budget in July.

The spending cuts were ruled out because Boris Johnson promised that the era of austerity was dead and buried.

Putting taxes in place would be crazy when people are struggling to keep their jobs and companies coming out of vacation decide whether to downsize.

This leaves only one serious option: incessant supply reform – policies designed to make markets and industries more efficient – alongside certain infrastructure projects ready to be implemented to level regions.

What is needed is a mix of appropriate tax cuts, helping bombed-out businesses convert debt into stocks, and greater incentives for individuals and businesses to invest in start-ups and small businesses and medium-sized enterprises.

At the same time, more emphasis needs to be placed on training and learning, dynamite should be planted in accordance with planning regulations while there should be incentives for new areas of opportunity across the country.

One of the many remarkable aspects of the coronavirus crisis is the generous spirit and flexibility shown by so many companies. The bosses and supermarket staff have been superlative in how they have adapted their services to assist customers during the lockout.

Restaurant and bar owners quickly changed trades – helped by a small change in the rules – to provide take-out services within days.

And yes, even the banks have gone out of fashion and hastened to offer mortgage holidays and interest rate freezes. Credit when credit is due.

At the local level, there are many stories of inspiring entrepreneurs and companies who offer innovative solutions.

Andy Street, the mayor of the West Midlands, explains how, a few days after the council sent out an alert on PPE shortages, more than 300 local businesses offered to change production.

This is why the Chancellor should take the time to listen carefully to what the bosses of the private sector have to say. They know better how to free us from the lock and which rocket boosters to fire.

Goodbye tyrie

The early departure of President Lord Tyrie from the Competition and Markets Authority is intriguing.

He says he cannot do his job properly within the confines of work. It is known that he wants stricter rules so that regulators can go against tech companies accused of scamming consumers.

He often maintains that we have an analog system of competition and consumer rights in the digital age.

Now Tyria, who resigns in September, wants to advocate more strongly for legislative and other reforms, in Parliament and beyond.

What can he say beyond? Are we about to see Fiery Tyrie – never one to walk away from a fight – face the FANGS? I hope so.

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