In the long-run, Covid-19 may well change the way we work and live. It may – and should – lead us towards a greener, less consumption-driven economy. The question for now is what to do about the economic devastation it will bring in its wake. Around 730,000 UK jobs were lost between March and July, the biggest quarterly decline since 2009, and unemployment is forecast by the Office for Budget Responsibility to reach its highest level since 1984 (11.9 per cent).
The coming downturn is as inevitable as the rain announced by blackening clouds. In this respect it is quite unlike the banking collapse of 2008, or even Covid-19 itself, both of which were unforeseen. Remember the Queen’s question in 2008 to a group of economists at the London School of Economics: “Why did no one see it coming?” The approaching unemployment crisis is an expected event, not an unexpected “shock”. Because it is fully anticipated, governments should be in a good position to offset its effects, if not fully, at least in large part, provided they know what to do. But the theoretical vacuum lying at the heart of current policymaking discourages any undue optimism that they might.
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