Teneo Insights Webinar: The Government Spending Review – Where is the Economy Going After COVID-19

Below please find key take-outs from our November 26th panel with Stephanie Flanders, Head of Bloomberg Economics and former BBC Economics Editor; Sir Anthony Seldon, Britain's pre-eminent political historian and biographer; Deborah Mattinson, Pollster and Founding Partner of BritainThinks; Amber Rudd, Teneo Senior Adviser and former Home Secretary; and chaired by Principal of Teneo’s Situations and Politics practice and former Downing Street Director of Politics and Communications, Craig Oliver.

Listen to the Call

Key Takeaways

1. Our panelists agreed that Boris Johnson and the UK Government are facing the biggest crisis moment of the last 300 years. The economic shock brought on by Covid-19 continues to require significant levels of Government intervention, borrowing and spending. Despite Covid-19 being a global event, other countries such as the US and some in the EU are showing early signs of a faster recovery than the UK. Meanwhile, the UK also has Brexit to contend with and, whilst many expect some form of ‘skinny deal’, the longer-term impact of this deal is likely to have serious ramifications, especially for SMEs.
2. The panel acknowledged Rishi Sunak’s strong performance in the Commons yesterday, with the £4bn levelling-up fund in particular being cited as a critical component of Johnson’s agenda for 2021. It was noted that the fund will be equally important for the Tory Party’s Chief Whip, who will undoubtedly use it as a bargaining chip to respond to backbench rebellions, especially from those in newly-won Red Wall seats. Beyond this, the panel noted a clear avoidance of Brexit and future tax rises in the Chancellor’s statement. And they were disappointed at the lack of green investments to support de-carbonisation. This will be an increasingly important topic next year as the country looks towards COP26 in Glasgow and building relations with the incoming President-elect, Joe Biden.
3. On cutting foreign aid, the panel broadly agreed that the move, whilst heavily critcised by some groups, would likely resonate well with many Tory voters, especially those in the Red Wall, who strongly believe that ‘charity begins at home’ and should be directed towards the UK recovery as a priority. Panelists believed that the lack of a clear date to re-instate the 0.7% figure likely means it won’t return to that level again under this Government.
4. As we head into Winter, the mood across the nation is gloomier than ever before. People are pessimistic about the country, their local communities and their personal lives, with younger, working class and female voters most likely to have a gloomy outlook. The battle between protecting health vs the economy continues, with the public typically more hawkish about the lockdown, despite positive news on a potential vaccine. Looking to the future, voters are very worried about the economy, with 9 in 10 expecting the cost of living to increase, and 8 in 10 believing that ordinary people will need to pay for it.
5. Finally, the panel agreed that Boris Johnson has a mountain to climb next year with the unique combination of a Covid-19 recovery and Brexit. Johnson will know that Rishi Sunak will have one eye on succeeding him in Number 10, however the two will need to work closely together to overcome major economic challenges such as rising unemployment. Meanwhile, the future of the Union will come into focus next year, with many voters in Scotland (and England), seeing Nicola Sturgeon as a stronger leader and communicator than the UK Prime Minister.