Will the Chancellor’s stimulus tackle Covid-19 fears?

Last week’s £12 billion stimulus package to tackle the health and economic consequences of Covid-19 now seems like a drop in the ocean compared to Rishi Sunak’s announcement this evening: an astonishing £330 billion package of guarantees for business loans, up to £20 billion worth of tax cuts and grants for small and medium size businesses to stay afloat. As well: a year of full business rate relief for all companies in retail, hospitality and leisure sectors. And, he says, this is only the beginning.

The Chancellor needed to indicate to business (and markets) that this Government is serious about keeping the economy going. But this isn’t a crash: this is a pandemic, a worldwide health emergency whose (many) symptoms include government closure of certain parts of the economy. This can’t be remedied by a stimulus. Recessions are usually handled by pumping cash into the economy, encouraging people to go out and spend money.