Time to be bold and to borrow big because there is no real alternative

LESS than a week to go until “Independence Day”, but the economic consequences of lockdown will go on far longer, unless we act boldly in the face of the deepest depression of our lifetimes.

Right now, the Government has two choices: one is grim and destructive following the “old wisdom”; the other is visionary with a bright future.

The first, austerity option, re-tightening the belt to stringently manage fiscal policy, would continue the devastation for many years to come with millions unemployed, businesses struggling, government revenue depleted and a consequential huge increase in public debt.

The alternative is simple but visionary: the Government must borrow vast sums – between £500billion and £1trillion – and invest incredibly wisely and cost-effectively in targeted areas.

Such unprecedented borrowing is possible, for the first time in living memory, by the unique set of circumstances induced by coronavirus and the resulting global economic plight.

First, interest rates are at an all-time low across the world. Second, deflation or very low inflation.

I believe both these factors are unlikely to change significantly for the next 10 years. Third, since all leading currencies are affected, the pound won’t be devalued.

This borrowed treasure chest should then be invested to provide maximum value – creating immediate short-term jobs while at the same time fostering business and enterprise that will provide long-term employment and growth.

How do we achieve this? There are, of course, a huge number of worthy projects, all delivering different benefits, but here are my four investment imperatives:

Renewable energy – vast capability needs to be created such that all our energy requirements are renewable, replacing unclean fuels much quicker than ever envisaged. The benefits are threefold: lessening environmental damage and tackling the climate crisis head on; creating jobs; and providing an export base for our technical solutions.

Let’s create our own Silicon Valley for renewable energy. Allocate a thousand acres of land for a dedicated Renewable Energy City that will house numerous world excellence centres, then attract “best in class” companies to relocate here, placing the UK at the forefront of research and development in this field.

Infrastructure – this refers to everything beyond energy. Obvious improvements would be fibre-optic cables for UK-wide high-speed internet, roads, rail, shipping, housing and state-of-the-art hospitals.

Industry – we need to fight incredibly hard to attract inward investment in jobs and wealth through subsidies and inducements. The UK should be a prime location for global businesses.

Apprenticeships – economically, young people have been hit hardest by

Unprecedented borrowing is possible due to the unique set of circumstances induced by coronavirus

coronavirus and austerity. We must invest heavily in them now. I propose a massive apprenticeship programme: five-year placements with leading businesses across all sectors. Couple work with day releases to further education at a high level.

Rather than pushing everyone to university, this would put young people in gainful employment and on a rapid personal growth path that ends with qualification, life skills and net wealth rather than a weight of £50,000 student debt. Some will ask: can we really afford to borrow up to another trillion pounds, taking our national debt to around £3trillion and 120 per cent of GDP? I say: can we really afford not to?

If we don’t stimulate the economy in the way I’m suggesting, the cost to Britain will be hundreds of billions of pounds per year in reduced GDP, reduced government revenue, reduced corporate profits, increased unemployment costs and, as a consequence, substantially increased government spending anyway.

The alternative to epic-scale investment is, in my opinion, not viable. Better to seize this as a huge opportunity for Britain to leap forward, minimise the post coronavirus pain but, more importantly, grow a solid future for our children.