Is a high-spending, high-debt economy the new normal?

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🗓️ 27 December 2020

⏱️ 35 minutes

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Summary

After a year battling coronavirus, the UK's debt now totals more than £2 trillion. In an effort to keep the economy afloat, the Treasury has paid wages, given tax relief, and even paid for people to eat out. As recently as five years ago, Conservatives would have thought this spending unsustainable. But with Boris Johnson's government being elected on a promise to 'level up' the country, will this high-spending, high-debt economy become the new normal?

With Paul Abberley, CEO of Charles Stanley Wealth Managers; Jake Berry, Conservative MP and chair of the Northern Research Group; and David Miles, an economist at Imperial College London and former member of the Monetary Policy Committee.

Presented by Kate Andrews.

Sponsored by Charles Stanley Wealth Managers.

Transcript

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0:00.0	Hello and welcome to the Spectators podcast. I'm Kate Andrews. COVID-19 has completely changed our
0:14.5	economic landscape. And as we try to rebuild from the largest economic contraction in 300 years,
0:20.3	questions are growing louder about
0:21.7	not just the timeline of our recovery, but what it looks like once it's achieved. Can the government
0:26.7	carry on borrowing vast sums of money to pay for their policies? Are investors confident about the
0:31.9	recovery approach the UK plans to take? Do other agenda areas, such as green energy policies or plans to level up,
0:39.3	complement the COVID recovery, or stretch resources too far? Joining me to discuss all this some more
0:44.5	are Jake Barry, leader of the Northern Research Group and the former Northern Powerhouse
0:48.5	Minister, Paul Aberley, CEO of Charles Stanley, and Professor David Miles, Professor of Financial Economics at the Imperial
0:56.4	College Business School. This podcast is kindly sponsored by Charles Stanley. Paul, let's come to you
1:02.3	first. This year we've seen a recession like no other, one that has come from forcing the
1:07.8	hibernation of economies around the world. We've seen markets adapt in expected
1:12.2	and unexpected ways. How long do you think COVID-Nomics will be with us? Has it changed our
1:17.9	understanding of the economic landscape permanently? Well, I think the announcement of the vaccine
1:22.9	program puts us on a new trajectory, but I do worry that we're going to have to be patient with that trajectory.
1:28.7	So it's difficult to see us moving out of that during calendar 2021. So I think the recovery will still
1:35.4	be COVID-influenced for some time to come. I don't see any change in the near term. And financial
1:40.6	markets will adapt to that also. David, in the Spectator's previous podcast with Charles Stanley,
1:46.4	we looked at the economics of the magic money tree.
1:49.6	The government has been borrowing huge sums of money to fund furlough,
1:53.4	eat out to help out and other support schemes.
1:56.1	Is this level of spending the new normal?
	...

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