Gerard Lyons | The Spectator columnists & writers

This was a Budget for the end of the Covid crisis

The Chancellor’s crisis management has been excellent. The Budget was another reflection of that, as Rishi Sunak unveiled further significant, targeted support to the areas of the economy that needed it most. Over the last year, fiscal policy has acted as the main shock absorber for the economy. Including measures announced today, a massive £352 billion has been spent on Covid support. This approach has been fully justified, with low inflation, rates and yields providing ample fiscal space. Debt dynamics have allowed the government to borrow cheaply from investors. Also, as we have seen over the last year, the Bank of England’s Quantitative Easing programme has led it to become the biggest buyer of gilts.

No, Amsterdam hasn’t overtaken the City

London is Europe’s major financial centre and one of the world’s two leading financial hubs. This is unlikely to change following Brexit. Its main competition is with New York, Singapore, Hong Kong and other centres like Shanghai that will emerge in the coming years. However, the headline of today’s main story in the Financial Times proclaimed, 'Amsterdam ousts London as Europe’s top share trading hub'. The article correctly reported that more shares were traded last month on 'Euronext, Amsterdam and the Dutch arms of CBOE Europe and Turquoise in January' than 'in London'. While the data in this story is naturally correct, it needs to be put within context in order to draw the right conclusions. There are probably seventeen exchanges in western Europe.

Rishi Sunak has bridged the economic gap. But what comes next?

Yesterday’s measures from the Chancellor were necessary. His timely assistance focused on a new targeted and temporary job support scheme to replace the expiring furlough, easing loan repayment terms for firms and a wider, more flexible VAT regime. One needs to examine the details of these to ensure that they are as comprehensive as they should be. Lest we forget, the Treasury Select Committee highlighted large groups were excluded from help previously. But there was a boldness to the announcements that goes some way to answer those who wanted the Furlough Scheme extended. The Chancellor addressed the immediate need to bridge the gap between the ending of existing support and the hoped for return to normal of the economy next spring.

London in limbo: can the capital survive this crisis?

We should worry about what is happening to London. Our capital is, after all, the country’s economic powerhouse. It accounts for just under a quarter of Britain’s GDP. In fact, three of its now most deserted locations — the City, the West End and Canary Wharf — account collectively for an eighth of the nation’s output. There is a danger that short-term damage to London’s economy could become permanent unless the right steps are taken. This was supposed to be the week when things would start returning to some sort of normality, as the government encouraged more people to go back to the office. Yet uncertainty prevails. The announcement last week that Greater Manchester and parts of Lancashire and West Yorkshire would be put under tighter restrictions with little warning has led to speculation that London could be locked down again.

The Edition

Can London survive coronavirus?

44 min listen

The Edition

Can London survive coronavirus?

44 min listen

Don’t panic about the UK’s high debt

Last week the Prime Minister focused on ‘build, build, build’. For the Chancellor, it was ‘jobs, jobs, jobs’ on Wednesday as he outlined an ambitious and interventionist suite of measures to prevent a rise in unemployment. These measures are estimated by the Treasury to be worth up to £30 billion. The last time the UK had high unemployment was in the early 1980s. The labour market was very different then – it was often described as sclerotic, with high unemployment also the consequence of a necessary restructuring of the economy. Today, however, the labour market is much more flexible and the deep recession and threat to jobs is from an economic shock. That is why the Chancellor should feel confident that his measures will be effective in limiting the rise in unemployment.

A solution to Britain’s productivity problems could be on the horizon

The UK economy suffers from low productivity. Productivity measures output per person, or per time worked. If productivity was higher across the economy then people could work less, or be paid more, or both. Productivity drives an economy's output and thus its potential growth rate and, in turn, living standards. So low productivity economies find to hard to keep up with high productive ones. This is not a new problem. Ahead of the financial crisis the UK was making progress in closing the productivity gap that existed with major competitors such as the US. Since the crisis, though, all western economies have suffered. At various times over the last decade this has been called a problem, a puzzle or a challenge.

Wednesday

Thursday

Friday

Thursday

Wednesday

Monday