‘Manchester a ghost town’: Economists in the North say Rishi Sunak’s budgets nowhere near enough to tackle coronavirus

Do the Chancellor of the Exchequer’s budget proposals do enough to help vulnerable people in the north during the coronavirus crisis? According to local economists, absolutely not — and there’s an urgent need for more radical action.

Just days ago, Rishi Sunak introduced a new budget proposal — on top of the £600 billion package he’d already announced on March 11 as the 2020 budget.

Included in the measure were “£330 billion of guarantees — equivalent to 15% of our GDP,” which meant that any business who needed access to cash could access a state-backed loan.

The central bank’s monetary policy committee voted unanimously to lower borrowing costs and to increase the BOE’s bond-buying program to £645 billion ($752 billion), up £200 billion.

But according to the economists Mancunian Matters spoke to, these measures aren’t anywhere near extensive enough.

Marcus Johns (above right) is a researcher at IPPR, an independent think tank focused on policies in the north of England.

Johns stressed that the north was already unprepared to face a further financial crisis, noting that regional inequalities cut across economic growth, productivity, wages and job creation.

“We have really broad inequalities when it comes to life and expectancy and mortality – I know that Blackpool, Manchester and Hull have mortality rates which are higher than parts of Turkey, Slovakia and Romania,” he said.

He also observed that if you look at regional data, three northern regions – the north west, the north east and Yorkshire and the Humber – have suffered a number of quarterly contractions since 2016.

Mancunian Matters also spoke to Christine Berry (above left), an author and political economist based in Manchester. Berry called Sunak’s second package “broadly welcome but…inadequate to both the public health challenges and economic challenges we face.”

She said that there was nothing to help renters (though she noted that the government has promised legislation to protect people from eviction), no increase in sick pay or extension of income support to the self-employed.

Which means in real terms? She believes that sick people who should be self-isolating will still end up going out to work out of fears of poverty.

“Reassuring promises are not enough for people on the breadline,” she said, arguing there’s an urgency to changing this situation.


Johns also notes that the statutory sick pay doesn’t go far enough, since workers must earn a minimum of an average of £118 per week to claim the £94.25 sick pay— meaning everybody eligible for this support automatically takes a hit to their income.

While he notes the government has made some changes to universal credit and the new employment support allowance to allow more people to access that, the application process is longer than the 14-day isolation period, making it a poor solution for those without access to savings.

Berry finds it concerning that the majority of measures amount to people taking on debt which will have to be paid back.

The costs of the crisis “are still being borne by workers and small businesses, it’s just that some of those costs are being deferred,” he said, citing the mortgage ‘holidays’ and £330 billion guaranteed loans for businesses as examples of this.

Given the fact that the UK is already overly indebted, Berry believes this is a risky strategy.

If the frontline of the hospitality industry is anything to go by, this sounds about right.

According to William Lees-Jones, the Managing Director of JW Lees, a Greater Manchester brewery and pub company with 150 pubs, inns and hotels across the North West and Wales, the loans have been “helpful but protecting wages would be better.”

He cited a 50% decline in profit in his pubs and noted that pubs and pub-restaurants in the city centre had been the worst hit.

“We are keeping all of our pubs open for now since this is how we can keep calm and carry on but it is costing us a lot of money to do so.”

The pub chain is offering unpaid leave, which Lees hopes will help in terms of childcare now that schools are closing.

“Grandparents looking after children seems like a recipe for disaster if people need to go to work.”

Mancunian Matters also spoke to Roop Ramsden-Gupta, the operation manager of the city centre cafe Teacup Kitchen.

He stated: “The Northern Quarter, as far as you can see walking down Thomas Street, is a near ghost town with realistically only works and people passing through for essential travel and purchases.”

Ramsden-Gupta thought that the financial measures introduced so far looked advantageous for businesses eligible for such loans.

He warned however: “The means to apply for such loans, and repercussions they may lead to after this pandemic is over and during the recovery period, may not be worth the loan in the first place.”


So what’s the solution? According to Johns, the government should be replicating strategies employed in Scandinavia – he cites the Danish model as a good example of this, where the government met with both trade unions and businesses and struck on a compromise: the state would pay 75% of employees on sick leave’s salaries, the companies would pay the remaining 25%.

“Bringing those people together and saying ‘How can we protect people’s incomes? How can we protect people’s jobs?’ has come up with this solution in which different people have a role to play.”

Berry believes given the urgent need to prevent people from going out and working, the simplest solution is a temporary universal basic income.

“This would give everyone the economic security both to follow public health advice and to keep spending (thus preventing a complete collapse of the economy).”

Given the spread of disease — with The Express reporting that the UK is on track for a worse mortality rate under coronavirus than Italy or China — it seems likely the government will be forced to adopt more radical measures soon. Let’s just hope the government acts before it’s too late.

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