The global coronavirus pandemic represents the biggest fiscal challenge facing the UK government since World War II. That is the stark opening statement of a paper published in the International Journal of Public Law and Policy. The report by Jan Toporowski of SOAS University of London and Robert Calvert of the Jump Institute of Political Economy, Governance, Finance and Accountability at the University of Greenwich, suggests that our course through the pandemic in terms of our health response are determined by the behaviour of the disease itself, our economic recovery will be determined by the behaviour of the government.
The team suggests that the quickest recovery will be obtained by maintaining a high level of government borrowing serviced by taxes on wealth and profits to preclude massive debts accumulating at the household or company level. They point out that given the inequalities across the UK that have been exacerbated by the pandemic, such an approach might ultimately reverse some of those problems and prevent the worst outcomes afflicting those with low incomes and little wealth.
Throughout the pandemic, the challenge has been to ensure people have access to essentials such as food and also get the medical support they need when they become ill at the same time as attempting to reduce the spread of the disease itself through lockdown, isolation, and quarantine measures. Ideally, this must all be done while maintaining monetary and financial stability both during the crisis with a view to sustaining that stability after the crisis is over. This, of course, flies in the face of the emergency measures which were forced to shut down non-essential retail, entertainment, and other business activities temporarily leading to the compression of consumption. This compression then has the effect of loss of income for many workers, the self-employed, and smaller business.
All of the problems, the team suggests are being exacerbated by the gross inequality associated with high levels of poverty and deprivation caused principally by deregulation of the UK’s labour market and welfare “reforms” over recent years. Hence the fiscal recovery must be government led to smooth away these inequalities by putting much of the burden for recovery on those who can afford to pay for it rather than punishing the poor still further in the post-pandemic world. This smoothing of inequality must begin now, before the end of the crisis so that we do not have to rely on the altruistic inclinations of the wealthy.
“The support given to health service employees and key frontline workers and volunteers shows the widespread willingness to share the burden of the crisis,” the team writes. “It is only possible to bring people together to combat the epidemic – and secure a just recovery in its aftermath – if the effort demanded is seen to be fair.” They point out that if we give way to the urge to reduce public debt or abandon progressive taxation, this will slow our recovery substantially and make the economic divisions greater. “The society that survives the epidemic and grieves the human losses deserves better,” the team concludes.
Toporowski, J. and Calvert Jump, R. (2021) ‘How to pay for the coronavirus emergency: the fiscal challenge’, Int. J. Public Law and Policy, Vol. 7, No. 1, pp.1–13.
