Economies run on confidence – the government mustn’t undermine it

Throughout the past few months the government has appeared to face an unenviable choice between saving lives and saving livelihoods. Nevertheless, a fortnight ago the path seemed clear. The numbers of Covid infections were falling, but the economic news was dire — hence Boris Johnson was engaged in a drive to reopen the economy as quickly as he could without prompting objections from his scientific advisers. Now things feel rather different. Economic figures from recent days have surprised on the upside: the CBI’s figures for retail sales in July show a sharp V-shaped recovery. Sales of cars and houses were running ahead of last year — during July at least. At the same time, though, the outlook on Covid-19 has darkened. Recorded new infections have inched up, echoing what has been happening in many European countries for several weeks.

The Prime Minister’s tone has changed utterly. His priority now seems to be fighting Covid, while letting the economy look after itself.