This week, chancellor of the Exchequer Rishi Sunak took centre stage at the dispatch box to deliver his first budget, amidst growing concern about Covid-19 and the precarious nature of the UK economy. Despite this event usually dominating the headlines for many days after, the outbreak of coronavirus has overshadowed the political calendar and threatens to continue to do so for quite some time, both at home and abroad. Is anyone else wishing we could have Brexit back?
A star is born?
On Wednesday, Rishi Sunak delivered his first budget in the House of Commons, announcing the government’s tax and spending plans for the year ahead. He promised to ‘do whatever it takes to support the economy’ as the economic fallout of the coronavirus grows. In terms of detail, Sunak announced £30 billion of stimulus to boost the economy in the face of the virus outbreak and pledged a separate £600 billion of infrastructure spending over the next five years. He also revealed he will revise the fiscal rules set out by his predecessor, launch a review into business rates and give the NHS an additional £6 billion for recruitment and infrastructure.
In terms of reception, the Tory press were quick to praise Sunak for his first performance as chancellor with the Daily Mail dubbing him ‘Dr Feelgood’, and the Sunday Telegraph editor saying that Sunak ‘passed his first test with flying colours’. Others went even further, tipping him to be the prime minister’s next successor after his performance, adding that it was clear he was a man at the top of his game. It wasn’t all high praise though. Martha Kearney, presenter from BBC Radio 4’s Today Programme questioned his conservative credentials, accusing Sunak of being more like Gordon Brown than Margaret Thatcher with his spend-and-borrow policies. The Guardian also argued that Sunak’s budget is proof that big spending is always a political choice.
Overall, this budget marks a turning point in economic and fiscal austerity policy that has dominated the last decade, however the most significant issue over the coming weeks will be how the government responds to Covid-19 and ensures that additional investment is used most effectively to propel growth across the UK.
Corona crash
The Covid-19 outbreak took quite the turn this week, from both a domestic and international perspective. Earlier in the week, Italy became the first country in the world to put its entire population into quarantine and many other European countries have adopted similar draconian measures in a bid to halt the spread of the disease, by shutting schools, universities and nurseries, as well as placing a ban on large-scale events.
Across the pond, in a momentous televised address to the nation, US president Donald Trump announced a total ban on travellers from mainland Europe to America for 30 days. Trump blamed the EU for the rapid spread of the virus and said closing the US’ borders to European countries inside the Schengen area was essential in order to halt the spread of the disease. This is quite the turnaround from Trump, who only weeks ago accused the Democrats of making coronavirus ‘their new hoax’.
Despite these dramatic measures being imposed across the world (and parliamentary ministers and colleagues testing positive for the virus), the prime minister has decided to take a more level approach to the fight against Covid-19. On Thursday afternoon Johnson delivered a sobering address to the nation warning that ‘many more families are going to lose loved ones before their time’ while insisting that the right thing to do at the moment is to carry on as normal as far as possible. Chief medical officer Chris Whitty and chief scientific adviser Patrick Vallance defended the UK’s strategy, which does not currently recommend wide-scale closures of schools and public buildings. They emphasised that the more drastic measures being adopted elsewhere are likely to do more harm than good in the UK at present. Their plan is to build long-term immunity to the new disease and flatten the peak of the outbreak by 50 per cent. Or as the prime minister put it, the aim is to ‘squash the sombrero’.
So far, reactions to the prime minister’s strategy have been mixed with some praising his efforts to keep the nation calm and others arguing he is not doing enough. His approach could be politically risky, particularly at a time when the public are looking for visible action to be taken in light of other ongoing crises, such as the winter floods. Johnson needs to keep working to convince his critics and continue to reassure the public that the UK strategy for Covid-19 is rooted in science, rather than political inertia.
Un-mark your calendars
The outbreak of Covid-19 has prompted a number of cancellations and potential postponements in the political calendar. Yesterday, the Labour party took the decision to cancel the special conference that was due to take place on 4 April to announce the results of the party’s leadership and deputy leadership contests. Instead, the conference will be replaced with a ‘scaled back event’ on the same day, however it is not yet clear what this will look like.
Face to face trade talks between the EU and UK will also be called off next week thanks to the coronavirus outbreak and US trade talks could also be under threat. The Department for International Trade said that discussions were still due to begin at the end of March, but plans could potentially change.
In addition, there is uncertainty over whether the country’s upcoming local elections – including London’s mayoral contest – are still scheduled to go ahead on 7 May. The UK’s Electoral Commission has recommended that the elections are postponed until autumn, citing concerns about voters’ ability to participate safely. Although postal voting is an option, the Commission has outlined that increased dependence on casting ballots ‘would create further and additional pressures and risks in other parts of the system’. If the government do follow through on the Commission’s recommendation, it would be the first announcement of a major national event being postponed in the UK over the virus.
Huawei rebellion
In non-coronavirus related news, the government faced its first proper rebellion earlier in the week over its decision to grant Huawei access to the UK’s 5G networks. In total, 36 conservative MPs voted against the government in an unsuccessful attempt to force Johnson to set out a timetable for excluding Huawei from future 5G phone networks. The government’s majority was cut to 24 as the rebels were defeated by 306 to 282 on the amendment put down by former Tory leader Ian Duncan Smith. However, had another 13 MPs joined the revolt, Johnson would have suffered an embarrassing defeat only three months into a new term following a successful election in December.
Although the rebels lost their fight in the Commons, don’t expect them to back down anytime soon. Chair of the defence select committee Tobias Ellwood stated that the government were “on warning” and those who revolted have threatened another showdown when a second piece of legislation, the Telecoms Security Bill, is brought forward later this year. They are likely to be joined by a number of the 22 Conservative MPs who abstained on Tuesday’s amendment, meaning the government’s 24 vote majority could be overturned unless concessions are made.
What’s coming up?
Looking ahead, it’s clear that Covid-19 will remain a topic of discussion for quite some time and this issue will continue to dominate the news for the foreseeable future. From an economic perspective, the impact of the virus has started to ripple through global economies with plunging stock prices and volatile markets worldwide. For now, efforts are being made to promote optimism, but if the virus isn’t brought to heel, significant economic fallout could very well ensue.