An economic error of historic proportions

Even now, Rishi Sunak does not seem able to admit to the full scale of the challenge facing the UK economy in the coming months. Yesterday, he warned that Russia’s invasion of Ukraine had created significant economic “uncertainty”. That is putting it mildly. Well before Vladimir Putin launched his murderous assault, households were experiencing severe financial pain because of runaway inflation. Now, some analysts are forecasting that the UK will fall back into recession, in part because of the threat of retaliatory sanctions from the Kremlin.

The Government has often been criticised for not having a serious plan for economic growth. It has appeared to believe, complacently, that the nation’s prosperity is almost guaranteed, and that taxpayers can be squeezed in order to fund massive new public spending and “investment”. That was always misguided and a betrayal of Conservative principles. Now, however, it threatens to push ministers into an economic and political error of historic proportions.

It is extraordinary that the Government is apparently resolved to push ahead with its plans to launch another tax raid on working people with a sharp rise in National Insurance contributions.

The Treasury is said to believe that it is too late to change course. This appears to be as much to do with bureaucratic inertia as anything else. Is the Government really so in hock to the interests of the Civil Service that it cannot abandon a policy with weeks to spare before it is meant to come into force? Especially as the consequences of proceeding are so dire.

Council tax, energy, food and fuel prices: all are rising at an alarming rate. Households must fund the extra expense out of their post-tax income. Do ministers seriously believe that voters will shrug off the impact of significantly higher personal taxation in such circumstances? Increasing the burden on businesses, at a time of some economic danger, could also result in higher unemployment.

The Prime Minister has been lucky. Partygate allegations have fallen from view and he has impressed on the world stage with his handling of the Ukraine crisis. He now has the opportunity to reset his premiership, with defence, energy and economic policies that befit the perilous new era we are entering.

If he persists with his injudicious tax plans, however, he risks throwing that opportunity away. Conservative governments that break their promises not to raise taxes do not tend to fare well in subsequent elections. Conservative governments that raise taxes as the country heads into a recession are courting economic and electoral disaster.

‘Plague Island’

Over the past two years, a popular narrative has come to dominate discussions about the UK’S handling of the Covid-19 pandemic. Britain, it was suggested, had fared uniquely badly due to what the Government’s critics saw as a laissez-faire attitude to the virus compared to other nations.

The Government was frequently, and intemperately, accused of having blood on its hands for not locking down earlier, or reopening too soon. In relying on its population’s common sense rather than official lockdown measures, Sweden, many said, was acting irresponsibly and would pay a terrible price.

A new study of excess deaths published in The Lancet flies in the face of such arguments. It suggests that the UK Covid19 death rate compares much more favourably to the rest of the world than previously thought. Many experts believe measuring excess deaths gives a more accurate insight, by discounting those who would have died anyway during the period and taking account of under-reporting of Covid in some countries. By this metric, the UK emerges in the middle of the global rankings, with a similar Covid death rate to France and Germany. Meanwhile, Sweden was found to have one of the lowest excess death rates in Europe.

Since the emergence of the pandemic, our understanding of the virus has changed many times – revealing both the limits of official wisdom and the folly of jumping to conclusions. As we near the second anniversary of the first national lockdown and attention turns to the lessons that must be learnt, findings such as these should offer a serious moment of reflection.

Bubblier music

An experiment by a California wine merchant found that champagne tasted better to a classical music accompaniment. Participants thought they were tasting five different glasses of champagne and were convinced they had a more exciting glass when listening to the Allegro giocoso third movement of Brahms’s violin concerto. Silence made it seem not so good. The experiment did not measure how much better wine made the music seem – just as it does sitting in the garden or talking to friends. One piece of music played to the winedrinkers was by Modest Mussorgsky who, acquiring the habit at a military academy where cadets got drunk on champagne, died of drink at 42. But we did not need an experiment to realise that it is unnecessary to listen to Pictures at an Exhibition every time we have a glass of wine – or vice versa.