The UK economy could be facing catastrophe in an autumn of discontent, as HM Treasury’s furlough scheme will be wound down in October while the threat of a second wave of Covid-19 may be on the horizon.
From August, employers must pay NI and pension contributions, then 10 per cent of employees’ pay from September, and 20 per cent from October. Around 8.4 million workers are covered by the furlough scheme, which allows employees to receive 80 per cent of their monthly salary up to £2,500. But as the scheme is wound down, as many as 250,000 firms could be forced to lay off staff.
538prom精品视频在线播放In the midst of all this, of course, Brexit hasn’t gone anywhere. This month brings the deadline to extend or not the transition period. Talks on a new trade deal between the EU and UK have made little progress. Fishing, state aid rules and the ‘level playing field’ have all proved stumbling blocks. State aid could be especially contentious.
538prom精品视频在线播放After coronavirus, it may be a matter of survival for the government to take a more active role in the country’s economy. The instinct of conservatives might be for a light-touch, small-state economy. But conservatism has been defined by a strong sense of patriotism as well.
How many conservatives would want to see the armed forces further cut to the bone or its functions handed over to private contractors? Singapore, for instance, may be a darling of free marketeers. Yet Singapore has two sovereign wealth funds, the government invests in and catalyses economic development, while state ownership is widespread. We find ourselves in a unique moment.
Would we prefer if (as with the botched privatisation of Britain’s pitiful rail network) critical assets and infrastructures ended up in the hands of foreign governments? If Britain topples over the economic cliff edge in October, we can expect a wave of job losses and defaults. If government has the resources to loan to strategic companies, it has the money to invest in them as well. Sovereign wealth funds can be national but, as with state-related pension funds, can be sub-national too. Norway and Gulf Arab states financed sovereign wealth funds through resource revenue. But that isn’t the only model, as Singapore has demonstrated.
538prom精品视频在线播放In normal times, if we borrow to pay for spending, we expect current or future generations to pay off the bill. Sovereign wealth funds can reduce this burden, if managed properly. There are many ways a sovereign wealth fund could be financed – directly from taxation or resource revenue, from the issuing of government bonds or from the fund itself issuing bonds.
Now of course we need to get the economy moving in the short-term. However, we don’t want to store up problems down the road with a large debt burden but very little to show for it. If tapping the bond market is the chosen route, any debt issued by a national sovereign wealth fund could be backed by government guarantee.
It would, of course, be managed by professionals, not bureaucrats. This would ensure the focus was long-term efficiency, rather than emotional or political considerations. A sovereign wealth fund could ensure we give something back to future generations.
After Covid-19, it may be a matter of survival for critical assets and infrastructure to be owned by the state – even if temporarily. The alternative could be some of Britain’s biggest companies going bust and millions of people going down with them. A sovereign wealth fund could ensure we are better prepared for future crises. The Britain of tomorrow could have more cash in the bank, could pass on more than a debt burden to future generations and enhance its standing around the world.
538prom精品视频在线播放Other countries are in the asset-owning game. Britain should be too. Now more than ever there is also a drive to Make in Britain. What better moment to start on-shoring and re-shoring critical industry than when we have seen the Western world’s overdependence on overseas manufacturing? Just as we now have the technology for homeworking (imagine if Covid-19 had hit in the 1990s), we increasingly have the capability to automate more manufacturing.
538prom精品视频在线播放The UK - with the best higher education system on earth outside of the United States – is in pole position for the growth technologies of the next century. A sovereign wealth fund, and government generally, could and should catalyse this. The business of Britain should be business. Everything we can do to further innovation, entrepreneurship and wealth creation should be championed. But for the sake of its survival, liberty, freedom and prosperity, the UK must not sell itself out to the highest bidder.
Future generations would never forgive us. We need to plant trees under whose shade we may never sit. At stake is the very survival of the UK as a free and prosperous nation. Most crucially of all, Britain must not be for sale.
Jonathan Saxty is assistant editor of