Self-de­feat­ing

The main im­ped­i­ment to a swift re­cov­ery? It’s the Gov­ern­ment

The Daily Telegraph - Business - - Front Page - Tim Wal­lace

Do you re­mem­ber when Boris was a gung-ho, go-get­ting, morale­boost­ing cham­pion for Bri­tain? A mere 13 months ago, our new Prime Min­is­ter gave a punchy, no-non­sense speech that was sup­posed to de­fine his new way of do­ing things.

“The doubters, the doom­sters, the gloom­sters – they are go­ing to get it wrong again,” Boris John­son said. “The peo­ple who bet against Bri­tain are go­ing to lose their shirts be­cause we are go­ing to re­store trust in our democ­racy and we are go­ing to ful­fil the re­peated prom­ises of par­lia­ment to the peo­ple and come out of the EU on Oc­to­ber 31 – no ifs or buts.”

OK, the date was wrong. But a stonk­ing ma­jor­ity meant the PM did “get Brexit done”. A man of ac­tion had his hand at the na­tional tiller.

Yet that man is un­recog­nis­able now, lost amid more U-turns than Spaghetti Junc­tion, and a mad game of whack-amole to shut down en­tire cities, and our bor­der with en­tire na­tions. This capri­cious ad­min­is­tra­tion is be­com­ing the great­est threat to the eco­nomic re­cov­ery. Much of the pop­u­lous is sick of it, and keen to re­turn to life as nor­mal.

Work­ers are up for it: more than 1.5m peo­ple got a job or moved jobs in the sec­ond quar­ter. That is fewer than the nor­mal pace of about 1.75m, but re­mains re­mark­able given the lock­down re­ces­sion. Bosses are keen: they have brought back most fur­loughed staff. Shoppers are en­thu­si­as­tic: re­tail sales in June were back above pre-Covid lev­els.

The bounce­back should be­come a boom. House­hold fi­nances are in great shape as fam­i­lies fun­nelled spare dosh into sav­ings or debt re­pay­ments through lock­down. Add in pent-up de­mand plus the su­per­charger of “Eat Out to Help Out” dis­counts, and we are on for a roar­ing sum­mer. In­fec­tion lev­els, hos­pi­tal­i­sa­tions and deaths, thank good­ness, are right down.

This should be the mo­ment to re­launch Bri­tain. In­stead, the threat of lo­cal lock­downs hang over all our heads. Who wants to re­stock their busi­ness or launch new projects with that men­ace loom­ing?

In­vest­ment in­ten­tions are at record lows, Bank of Eng­land sur­veys show. Com­pa­nies loaded up with debt to sur­vive lock­down, but in­stead of re­turn­ing to growth now find re­stric­tions re­turn­ing.

The en­tire tourism in­dus­try takes reg­u­lar pun­ish­ment beat­ings in the form of overzeal­ous quar­an­tines.

Cus­tomers can­not make book­ings with con­fi­dence. Work­ers face be­ing locked at home for a fort­night on re­turn from a pre­vi­ously safe des­ti­na­tion, just as they need to get back to the coal face.

Even the dis­count din­ners risk be­ing un­der­mined with a war on flab. Fun and spon­tane­ity have been sucked out of town cen­tres with non-stop warn­ings on pub­lic trans­port, one-way sys­tems within shops and even on streets, plus en­forced face masks to re­move any hint of so­cial en­joy­ment. Bri­tons are do­ing their best, aban­don­ing the para­noia of of­fi­cial­dom to start judg­ing risks for them­selves. Af­ter a week or two of strict mask ad­her­ence a glance around su­per­mar­kets shows grow­ing num­bers sim­ply for­get to cover up, be­cause they are no longer fear­ful. Those in­dulging in a cut-price meal, or even es­cap­ing on hol­i­day, find that a dose of nor­mal, so­cia­ble life is a great cure for coro­n­a­pho­bia.

John­son be­gan well with se­ri­ous steps to pre­serve the econ­omy for a rapid re­cov­ery post-pan­demic. Even the early days of cau­tious re­open­ing were sen­si­bly han­dled. But it has dis­solved into a morass of con­flict­ing guide­lines and mud­dled pol­i­tics. All di­rec­tion is lost.

The best chance to re­store or­der is for school to re­turn smoothly, cre­at­ing a nat­u­ral mo­ment to re­turn to or­der.

Un­til that hap­pens, the Gov­ern­ment is ef­fec­tively driv­ing with one foot firmly on the ac­cel­er­a­tor and the other hard on the brake. That threat­ens what has the po­ten­tial to be a rapid and re­mark­able re­cov­ery.

The $2 tril­lion prize

How did Ap­ple dou­ble its mar­ket value, reach­ing $2 tril­lion (£1.5 tril­lion) this week just two years af­ter be­com­ing the first com­pany to break into 13 fig­ures?

One ob­vi­ous an­swer is that tech com­pa­nies were al­ready fash­ion­able be­fore the pan­demic be­came es­sen­tial once phys­i­cal con­tact was banned. Yet that is not what makes Ap­ple spe­cial.

The real value lies in its ap­peal as a lux­ury brand. As Scott Gal­loway ar­gued in his book The Four, this shift from be­ing a sec­ond-tier elec­tron­ics provider to a high-class style icon could give Ap­ple an ex­tremely long reign as a top-earn­ing ti­tan.

Be­ing less clever than Gal­loway, I had long as­sumed Ap­ple’s star would fade: af­ter ef­fec­tively in­vent­ing the en­tire mar­ket for MP3 play­ers, smart­phones and tablet com­put­ers, the raft of im­i­ta­tors (fre­quently equalling or ex­celling Ap­ple’s qual­ity, and un­der­cut­ting its price) would de­stroy the leader.

Clearly the Wal­lace hedge fund would have lost a great deal of other peo­ple’s money back­ing this fool­ish hunch. I had reck­oned with­out the power of con­spic­u­ous con­sump­tion.

Who wants a slick phone from an un­known brand, when you could show your taste, class and, cru­cially, spend­ing power by buy­ing an Ap­ple model in­stead? This has pow­ered pre­mium brands with enor­mous mar­gins through­out the ages, and the dig­i­tal era is no dif­fer­ent. The pan­demic poses chal­lenges to this model. Luck­ily for Ap­ple, peo­ple need tech more than ever.

But for tra­di­tional pre­mium prod­ucts, the out­look is more bleak. What good is a lux­ury hand­bag if no­body gets to see it? If you are not out shop­ping, so­cial­is­ing or par­ty­ing, you do not need an ex­pen­sive watch or high-end make-up.

If you are not driv­ing to work, no­body will see your flash sports car parked os­ten­ta­tiously out­side the of­fice. A de­signer work dress or tai­lored suit serves no pur­pose if you are not go­ing to meet­ings.

So how to show off ef­fec­tively in the Covid era?

My money is on home ren­o­va­tions. A smarter prop­erty means the lucky few you in­vite around can ad­mire your enor­mous spend­ing power. High-end book­shelves will en­hance your pres­tige on a Zoom call.

Ex­clu­sive hol­i­days are an­other good bet. In a sea­son when trips abroad are hard to come by, re­lax­ing in lux­ury – and plas­ter­ing so­cial me­dia with glitzy pho­tos – will be the ul­ti­mate way to brag. Of course, you will be be­rated by the ev­er­more vir­tu­ous pu­ri­tans who ha­rangue any­one who dares to break out of mis­er­able iso­la­tion.

But pub­lic self-de­nial has al­ways been a pop­u­lar way of show­ing off – and it is cheaper, too.

Restau­rants have ben­e­fited as cus­tomers make the most of the ‘Eat Out to Help Out’ scheme but at­tempts to get other sec­tors go­ing have been thwarted by mixed mes­sages from min­is­ters

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