Prepare for post-2008 austerity nostalgia: £300bn to be paid in UK for Covid-19 & it WON’T be billionaires who foot the bill

A confidential Treasury assessment of the Covid-19 crisis estimates it will cost the Exchequer over £300 billion this year, meaning a new wave of austerity is on its way, with the burden falling on the backs of ordinary people.

Large sections of the left, including the Labour Party and leading trade union figures, were cock-a-hoop when they heard the news that UK Chancellor Rishi Sunak was to extend the furlough scheme for around 7.5 million employees until October – at a cost of up to £100 billion. One suspects they’ll be less pleased though when the time comes to pay for the government’s ‘generosity’. 

The cost of the lockdown has been calculated at £2.4 billion a day. And according to a leaked assessment published in the Daily Telegraph the ‘base case scenario’ forecasts that Britain will have a £337 billion deficit this year – that’s £300 billion more than the amount forecast in March’s budget.

The worst case scenario has the deficit even higher – at £516 billion – increasing to a cumulative £1.19 trillion, yes TRILLION – over five years.

The Telegraph reveals that a document drawn up for Chancellor Rishi Sunak, an ex-Goldman Sachs man, sets out a proposed ‘policy package’ of tax increases and spending restrictions. These included a two-year freeze on public sector pay, no automatic increase in the state pension, and hikes in VAT and National Insurance. Under the base case scenario there would be a need for £25-30 billion of tax rises and spending cuts, under the worst case scenario £80- £90 billion of tax rises and spending cuts. We’re talking VERY big money here, folks.

You can just imagine the speech that Sunak is likely to make once the lockdown eases. It’s probably already written. “We’ve done tremendously well in our ‘war’ against the virus, but ‘saving lives’ has come at a great economic cost. To ‘protect’ our fantastic NHS and to make sure it’s fully prepared for a ‘second’ wave of the virus which we know is sure to come, we now need to take a number of measures which I know will not be popular, but are sadly necessary. I’m going to level with you…”

The Covid-19 lockdown and the consequent drain on public finances, will provide the perfect excuse for a Conservative government to impose a new wave of finance-capital friendly austerity which will cut even deeper than the retrenchment imposed by Cameron and Osborne in 2010.

I spent much of early 2011 fighting (successfully) to save my local public library but this time round public libraries face an even bigger threat, as local authorities, already cash-strapped before Covid-19, will be under great pressure to further reduce the network. Privatisation of the motorways and major ‘A’ roads was mooted under the Conservative/Lib Dem Coalition, following a 2009 NM Rothschild paper which said it could raise £100 billion, but it could now be put forward as a serious policy option to cut the deficit. 

Things deemed ‘unthinkable’, ‘un-doable’ or ‘too extreme’, pre-Covid will suddenly become politically possible. Don’t forget that the Tories have an 80-seat majority, and no general election is due until 2024.  That fact seems to have been forgotten by those on the left who call for the coronavirus crisis to be financed by “closing tax havens” and “making billionaires pay more.” 

They also seem to forget who Rishi Sunak, the chancellor, is. After working as an analyst at Goldman’s, he was then a partner in a hedge fund management firm. He is not only extremely wealthy himself, he married the daughter of a billionaire. The idea that ‘Very Rich Rishi’ is going to close tax havens or get billionaires to foot the Covid-19 bill is absurd. On the contrary, we can be sure that whatever measures are imposed, it will be the 0.1 percent who do best of all. 

In late April Forbes magazine reported how well billionaires – and the banks – were doing under the pandemic.

And when the Covid-19 crisis is over, (or even before it’s over) the super-rich and the banks will be able to swoop and buy up companies and assets on the cheap, increasing their wealth still further. 

Meanwhile, ordinary people in Britain are likely to face an extremely tough time of things, for many years to come. Job losses (when the furlough period ends), tax rises, pension freezes and wage freezes will be the ‘new normal’. The idea that the huge financial cost of shutting the economy down for weeks, or even months on end would somehow not affect the majority of people in a negative way was extraordinarily naive. There’s no such thing as a free lunch, as millions of Britons are about to find out.

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