There is no great surge of consumer confidence waiting to sweep us back into economic growth.

The British government believes that it has sufficiently reduced the spread of infections that it can focus instead on tackling the economic cost of the lockdown. But there's a threefold challenge.

The first is that the United Kingdom may not have successfully flattened the spread of new cases, that the reopening will trigger a second spike in infections, and that the country lacks the competent leadership and/or state capacity necessary to control a second wave through testing, tracing and isolating new cases. This challenge is a known unknown. The second challenge is that large numbers of British people may not believe that the UK has successfully flattened the spread of new cases, and therefore reopening merely triggers wave after wave of bankruptcies and closures.

The government's operational competence may never be tested because people opt not to take advantage of the reopening. Don't forget that large numbers of people were reducing their social contacts before the government formally locked down ' and there is no evidence that they are going to take their cues from the government about when to emerge from lockdown either. The United Kingdom locked down "from below" and will unlock the same way. The third challenge is that, due to the continuing closures elsewhere, the economy may revive, but merely in a way that changes the trajectory of large parts of it from immediate bankruptcy to imminent bankruptcy.

The announcement that close to 2,000 people will be made redundant by the Casual Dining Group ' owner of Bella Italia, Café Rouge, Las Iguanas and various airport restaurants ' is a case in point. These restaurants live off passing trade and casual drop-ins in shopping centres, cinema multiplexes, around theatres and concert halls, and business districts: all places that won't reopen any time soon.


About the Author: Glen Callow

Prime Accountants News Centre

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