The country of Adam Smith and Margaret Thatcher seems to have forgotten the invisible hand. Faced with the pandemic, the United Kingdom has made an economic shift, betting on the great return of the state. Boris Johnson, the British Prime Minister, even refuses to speak of"Austerity", preferring to speak before the House of Commons "The word in A", as if it were a curse. "We have absolutely no intention of going back," he assured Wednesday May 6.
"The choice of a European model was clearly made, protecting employees and businesses during confinement, as opposed to the American model, leaving people out of work, finds David Owen, economist at Jefferies Bank. We will see in a year which of these two models works best, but for now, American statistics (30 million new unemployed) are atrocious. "
Fog of numbers
Thursday May 7, the Bank of England has come to underline the extent of the current crisis, whereas the United Kingdom is the European country which has the worst human toll of the pandemic, with an official number of deaths of more than 30 000. Faced with the fog of figures, it has given up making a forecast but still publishes a "Central scenario" : recession of 14% in 2020, soaring unemployment to almost 10% (against 4% currently), household consumption down 14%…
However, it continues to bet on a strong rebound, with 15% growth from 2021. "The aim of government policy, like ours, is to limit long-term damage", says Ben Broadbent, vice-governor of the Bank of England. Like France or Germany, the approach is therefore to put the economy on a drip, the time of confinement: general partial unemployment to avoid layoffs, emergency loans to companies to limit bankruptcies …
The most spectacular was partial unemployment. The UK did not have a similar pre-existing system, so it had to be created from scratch in record time. Now, six million employees receive 80% of their salary, paid directly by the state (up to 2,500 pounds per month, 2,850 euros, or the median salary). "The first indications are that this system is working and will help a smoother economic recovery", assures Andrew Bailey, Governor of the Bank of England.
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