The people will decide the pace of this recovery – the government has to accept that

But there are things, like a value-for-money test to all its spending proposals, that Boris Johnson can implement, writes Hamish McRae

Sunday 28 June 2020 20:00 BST
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Boris Johnson has been optimistic about the UK’s economic potential
Boris Johnson has been optimistic about the UK’s economic potential (Getty)

Governments can spend money and that can give a short-term boost to the economy. But the recovery will only be sustained if we decide to spend.

There is a sharp contrast between the bubbly optimism of Boris Johnson and the news about the UK and global economies. The prime minister hopes that the country will “bounce back”, and it is certainly true that some sort of revival is under way as the lockdown is progressively lifted. It is also true that it makes sense for governments to use their borrowing power both to push immediate spending power into the economy, and to use the very low long-term interest rates as an opportunity to fund needed investment projects.

But there are limits to what governments can do. It is possible that the economy will indeed recover the ground it has lost in the past four months by, if not the end of this year, some time early next. The International Monetary Fund (IMF) has produced some dire forecasts for the world economy. Ironically the only major country to end up with any growth at all this year was China. The rest of us were all down, the UK by 10.2 per cent, and it is not much comfort that it thought France, Italy and Spain would all be down by more.

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