Illustrations by Hannah Robinson
The COVID-19 pandemic has created the biggest upheaval that many of us have lived through. Freedoms we have taken for granted throughout our University years, such as the right to go to the pub, the club or even the local McDonalds have been stripped away.
When we finally do get our freedoms back, we will be stepping outside into possibly the biggest recession since the Great Frost of 1709. We should look upon this as an opportunity to change our economic model for the better, away from crony capitalism and towards a genuine free enterprise economy.
A key step in rebuilding our economy for the better, will be focussing bail out packages on small businesses. In 2008, bankers were given an unconditional bailout, as payment for the crisis they caused. In the UK, this meant that a whole generation was shut out of the property market and the whole population has had to live under 10 years of austerity.
The 2020 recession will require another stimulus package and businesses will need our support. But this time, government must focus on bailing out the local butcher and baker, rather than the supermarket or the trans-national corporation who often do not pay taxes in this country and thus do not contribute to the system that funds their bailouts.
It is very possible, and perhaps preferable, that with increased social distancing measures at supermarkets – which may be in place until we have a vaccine or treatment for COVID-19 – as well non-locally sourced food being predominately what is available, people may start to shop for local produce instead.
This should be coupled with a reduction on needless regulation and taxes. Examples of this deregulation could be the removal of the requirement under EU law for café kitchens to have two sinks, one to wash hands and the other to wash dishes. In addition some “green” taxes could be removed including the Ultra Low Emission Zones (ULEZ), which has a particularly negative effect on mobile sole traders, and Air Passenger Duty which will only serve to make life worse for the already struggling aviation industry. This will allow business to quickly get back on its feet.
Which brings me neatly onto my second point, deglobalisation. This crisis was caused in no small part because of our dependence on globalisation, particularly on China. I argued back in January that we should have immediately closed our borders to infected areas.
However, the government was against taking this measure, as it feared significant economic damage. A few months down the line, it is clear that the economic damage that the COVID-19 has had so far, may already dwarf what the impact of taking these precautions would have been. With most global movement now suspended and the travel and hospitality industries on life support, the impact of closing the border is being felt despite the Government’s initial indecision.
After lockdown ends, it is likely that we will see mass unemployment, particularly from the hospitality and services industries. Why not bring our manufacturing industry back to the UK? This could be done by way of tariffs on Chinese goods, as well as cutting corporation tax to around 5% and make investing in Britain more attractive to firms. The economic rewards will more than make up for lost tax revenue. We can re-train people with manufacturing skills which could then bring an increase in job stability in the UK and allow British workers to earn a better wage. ONS data shows that wage growth was higher when manufacturing was a core part of the UK economy.
Finally, the time has come for Universal Basic Income, the SNP are already pushing for this idea and for once I agree with them. When the furlough scheme is wound down, we can expect some redundancies. A UBI would give people a safety net and could reduce poverty as well as give younger people graduating into a reduced jobs market, the chance to save and invest for the future. If most benefits are rolled into a single unconditional payment, it will almost certainly prove cheaper and less bureaucratic than the current system. Studies have also shown a UBI to lead to better employment and well-being outcomes.
Let’s not return to 2008-09 where big business was given an unconditional bailout and smaller businesses were left to go under. Instead we should focus on a recovery for all.