3. What should the government be doing? The furlough scheme may have had unfortunate side effects in making too many people comfortable with lockdown. There are now two cliff edges, one in late July and one at the end of October, both of which could be tricky.
Apart from that, there is a strong case for the government to be thinking more strategically about the kind of economy it wants. The crisis has exposed weaknesses in the UK, including in areas like pharmaceuticals in which we thought we were very strong. Will it result in reshoring of manufacturing activities? How should the government think about taxation and incentives? There is no case for big increases in taxation to pay for the crisis, but there is a case for better and simple taxation. Should we be better prepared for other long-term risks e.g. climate change. After failing to prepare for a pandemic that had been on the government’s risk register for years, politicians will not be easily forgiven for not preparing for the next crisis. We should not bet starry-eyed about this. Governments will grab hold of anything that looks like a return to normality. Nor should this usher in a safety-first, risk-averse approach to everything, which would be the worst thing for our entrepreneurial economy.