Jeff Prestridge  

Looking to the new normal

Jeff Prestridge

Jeff Prestridge

Slowly, but surely, the economy is grinding its way back into motion.

I see it in the busier building sites near where I live in Wokingham – and I hear it from my bedroom as more motorists make their early morning journeys to work.

The road outside now sounds more like Silverstone race track compared to the eerie silence of last month.

Of course, we have got a long way to go before ‘normality’ is restored (maybe ‘normality’ will never return), but we should all welcome the fact that the economy is cranking through its gears again.

The quicker the better as far as I am concerned, notwithstanding the need to ensure that the evil coronavirus is not allowed to flare up again and spread a second wave of grief.

We should also be grateful for the small mercies thrown our way by a nervous government: the re-opening of garden centres (if only I had a garden); being permitted to visit public parks without being met with a closed car park; allowed to play a ‘two ball’ round of golf with a friend (my clubs continue to gather dust in a cupboard somewhere); and allowing our cleaners to return (if onlyI had one).

Far more importantly, the government continues to keep mass unemployment at bay with its generous furlough scheme.

A scheme that has now been extended until the end of October and that ensures stood-down workers are guaranteed 80 per cent of their wages, capped at £2,500 a month (thank you, chancellor of the exchequer Rishi Sunak).

Some 7.5m jobs across 935,000 companies are covered by the scheme and it is estimated that it will end up costing the government between £60bn and £80bn.

These are scary numbers whichever way you look at them, although I dread to think where we would be without it – probably facing the same unemployment issues as across the pond in the US.

You do not need to be a financial genius to realise that at some stage the government is going to have to recoup all these costs – and other lockdown costs besides – through higher taxes.

Rises in income tax, VAT, national insurance contributions – as well as a trimming back of tax relief on pension contributions – are all likely consequences of the government’s generosity in recent months.

For many workers, especially those furloughed, the future remains an uncertain one. Will they have a job to go back to?

And of course, we have already seen tens of thousands of workers made redundant as their employers trim their financial cloth to best fit a much shrunken economy post-lockdown. For them, the financial future is a bleak one.

Are there any financial positives to come out of this horror show? A few, although some of you may accuse me of scraping the proverbial barrel.