Journalists and historians are already busy compiling books on the story of the Covid-19 crisis.
The first few chapters have probably been drafted, and – depending on the author’s perspective – blame for policy mistakes has been attributed to politicians, advisers (one in particular, perhaps) and scientists.
What few can disagree over is that there will be a monstrous bill to be paid.
Chancellor Rishi Sunak’s March Budget was already expected to take government spending this year to £55bn more than the government received.
Now that figure has ballooned to around £337bn, bringing overall debt to in excess of £2tr.
Modern monetary policy cannot magic this away.
When numbers get this big it is hard to comprehend their meaning.
In simple terms, by the end of the year the UK government’s debt will be more than the whole country earns in a year.
And that has not happened since the 1950s, when we were paying off the costs of the Second World War.
Low interest rates
Some might deny there is a problem.
With so many central banks buying debt and investors looking for safety, the government is actually now paying less to service this much bigger debt than it was a few months ago.
In May the UK government issued a two-year bond paying negative rates. In other words, it was being paid to borrow.
The government needs to lock in these low rates for as long as possible. But even then the debt will still need to be repaid at some point.
Growth and inflation
Economic growth and a big dose of inflation in the 1970s did most of the job paying the post-war debts.
With the country facing the worst recession in 300 years, the Chancellor is doing everything he can just to keep the economic embers glowing.
He is expected to unveil plans for infrastructure spending this month that will echo Roosevelt’s New Deal series of public works that helped lift the US economy out of the slough of the Great Depression.
Perhaps this is why markets seem to be pricing in a V-shaped recovery. Perhaps they are assuming a vaccination is around the corner, too. We are more sceptical about a bounceback. We have never held so much cash in client accounts.
Can inflation help reduce the debt? Current political trends are towards protectionism and deglobalisation of supply chains.
That will drive up costs. In theory so should central bank purchasing – quantitative easing.
But the government’s 2 per cent inflation target does not look like being breached soon.