News | Thursday, 30th April 2020
Covidist manifesto: how to tackle the UK’s pandemic economic crisis
Coronavirus has exposed fragility and inadequacy of welfare state, warns new policy paper
Public spending will need to increase significantly and wholesale changes made to taxation, financial regulation, employment and industrial relations to address the UK’s economic crisis, say researchers at Manchester Metropolitan University.
Austerity has left the nation unnecessarily vulnerable to the financial consequences of Coronavirus (COVID-19) and spending cuts should be discounted as part of any economic recovery package, according to a new policy paper from Manchester Metropolitan’s Future Economies Research Centre.
In The Covidist Manifesto: Assessing the UK state’s emergency enlargement, researchers outline how the economic deficit that will follow the Coronavirus pandemic will be too large for spending cuts to play a meaningful role in its recovery without inflicting near-unimaginable damage on UK society.
Proposals suggested to address the downturn include:
- a one-off windfall tax on wealth
- embracing a measure of economic success besides GDP that better captures human development and wellbeing
- rethinking labour market policy and welfare benefits
Researchers also warn of the danger that future economic plans could lose sight of the climate crisis and call for a ‘green stimulus’ designed to instil sustainable practices within every firm and industry benefiting from government support.
Dr Craig Berry, Reader in Political Economy at Manchester Metropolitan University, said: “There is little doubt that the impact of Coronavirus on the UK economy will be enormous. It is vital that we seize the opportunity to put something better in place of the economic rubble now confronting us, rather than simply rebuilding upon unsustainable foundations.
“The basic building blocks of a new political strategy are beginning to form, but many uncertainties in future government policy remain that we have looked to address through our research.”
A one-off windfall tax on wealth is one of the proposals put forward by the research team to address the changes needed in fiscal policy and taxation.
The research also suggests significant changes to financial regulation and monetary policy, with pensions investment practice highlighted as particularly urgent due its contribution to many of the financial risks exacerbated by the Coronavirus pandemic that has left pensions savers vulnerable to the sudden economic downturn.
Radical shifts to industrial policy will be possible and necessary, researchers say, which should focus on nurturing more of what society needs, disincentivising business models which seek to extract rather than produce value, resulting in higher rewards for those in ‘essential’ jobs.
The research also calls for a break in the “cycle of mistrust that has characterised UK welfare policy” with precarious working conditions in self-employment suggesting the need for a welfare system better designed to prevent poverty among self-employed families.
Researchers also recommend a new approach discouraging entrance into low-paid self-employment and encouraging early exit and transition into formal employment.
Dr Berry added: “The Prime Minister has already referred to the country’s last major economic crisis in 2008 and promised that the government’s rescue package will be different.
“We are asking how different this will really be at a time when the economic policy rulebook has been discarded, with a Conservative government being forced to act in a way that would have been utterly unimaginable just a few short weeks ago.
“Our research shows that, while the implications of the pandemic coupled with a recent history of economic mismanagement require an enlarged state, a progressive response must embrace the empowerment of citizens, workers and communities within the covidist state.”
The paper is authored by Dr Craig Berry, Dr Nick O’Donovan, Dr Daniel Bailey, Dr Adam Barber, Dr David Beel, Dr Katy Jones, Dr Sean McDaniel and Rebecca Weicht.
