An emergency stimulus is the electrical shock the UK needs
Forget what he said about VAT, Stamp Duty or even jobs — the soundbite from the Chancellor’s summer statement today is “eat out to help out.”
During August the Government won’t just be permitting us to go out for a meal but also paying half the bill! Yes, T&Cs apply — but it’s still quite an offer.
As Sunak acknowledged, this is not something that any British government has ever done before — let alone a Conservative government. We can expect complaints about fiscal irresponsibility — and snobbish remarks about the money being spent in Nando’s and Wetherspoons.
In normal circumstances, eat out to help out would be a stupid policy (ditto the temporary cut to Stamp Duty), but these are special circumstances — extraordinary, in fact.
It’s like applying an electrical shock to someone’s heart — in most cases, an extremely bad idea, but not to someone in cardiac arrest. An emergency stimulus is exactly the right treatment for sectors like hospitality — and there’s no need to be subtle about it. Indeed, high profile, shameless economic populism is just what we need right now.
As Sunak reminded us, economic output fell during the lockdown by as much as it rose in the previous 18 years. When that gets back to some kind of normality we can start applying normal criteria to economic policy judgements. But not before.
On a side note, the body language between the Chancellor and the Prime Minister is worth watching. While the former turned in another assured performance, the latter gazed on with both approval and what looked like genuine affection. This wasn’t the rictus grin of a boss who sees a younger colleague stealing the show (and, in time, the top job). No, this was the proud father who can see that the next generation is ready to takeover — and looks forward to it.