I confess to a completely surreal feeling when I hear government spokesmen and ministers talk about the Brexit timetable being unaffected by coronavirus as if the pandemic was nothing more than an irritation, a slight itch on the body economic. Let us be honest, this is going to deliver such a profound shock to the country's finances that respected economists are having problems simply describing how immense it will be.
David Smith, the long standing economics editor at the Sunday Times shares his column with his own blog and last week his analysis can be summed up in this paragraph:
"You may ask, if this is so temporary, concentrated in the current quarter, why the OBR also has GDP for 2020 as a whole falling by 12.8% this year. This is one time when I can say this would be [the] biggest fall in living memory. It is three times the drop in GDP in 2009, when the global financial crisis gave use the worst year in the post-war era. Nothing like it has been seen since the Great Frost of 1709."
Now Paul Johnson of the IFS, surely THE most respected economist we have and the go-to person for any assessment of the economy is quoted by the BBC in a report published yesterday:
"The UK's budget deficit is set to see 'an absolutely colossal increase to a level not seen in peacetime', the director of the Institute for Fiscal Studies has said. The economic impact of coronavirus was likely to push the deficit to as high as £260bn, Paul Johnson told the BBC.
"He was speaking after latest figures showed that the deficit hit £48.7bn in the 2019-20 financial year. But Mr Johnson said those figures were 'the numbers before the storm'."
Then a member of the BoE's interest rate setting committee, Jan Vlieghe, piles in by saying early indications are that the UK was "experiencing an economic contraction that is faster and deeper than anything we have seen in the past century, or possibly several centuries".
Let us be frank, we are facing a financial Armageddon and the idea that anyone this side of an asylum would contemplate breaking links with out biggest trading partner at the end of the year is simply out of the question.
You would need levels of optimism not seen since Eddie the Eagle Edwards put his name forward for the 1988 winter Olympics ski jumping competition to think Brexit will be able to go ahead in December as planned. Even the prime minister, always looking on the bright side, must have a few niggling doubts. His advisers would be better suggesting he begins to create a bit of wiggle room otherwise he will make Chemical Ali look prescient.
No wonder EU negotiators expect us to ask for an extension. I don't know what odds you can get put my advice is but a bit of money on it.
