It’s always tempting for governments to respond to economic trouble with a debt-fuelled spending splurge, but it’s a notoriously blunt tool. The root of the current problem is not financial panic but a rational response to the coronavirus. People are travelling less, staying away from shops and the workplace, delaying various projects, and they will keep doing so while the uncertainty remains. This disruption is painful but temporary. It is not symptomatic of financial malaise. It would be a mistake for the Conservatives to use this as a pretext to abandon their five-year plan to control the public finances.
The £30 billion stimulus to address jitters over coronavirus was quite a figure, especially as the extent of the economic impact of Covid-19 is far from clear. The size of the sum (and Bank of England response) suggests that the Treasury thinks Britain might be in far more economic trouble than the figures suggest – and that this government is very willing to spend its way out of tight spots.
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