12 April 2020, 12:52
Boris Johnson’s former economic advisor warned an extension to lockdown could result in a deeper economic downturn than initially feared.
Dr Gerard Lyons is Chief Economic Strategist at Netwealth and former economic advisor to Boris Johnson when he was Mayor of London. He joined Nigel to ponder what sort of economy the UK is leaving for itself when lockdown is lifted.
Nigel began the conversation by asking “how much damage does another couple of weeks of lockdown do to the economy”.
Dr. Lyons pointed out that the UK has “a medical crisis as well as an economic crisis” and that before any judgement is made on the economic impact of coronavirus it has to be recognised that the disease is putting massive strain on the medical industry.
He told Nigel that what is important right now is that “the government gets money to people who need it” through the furlough schemes it rolled out previously.
The strategist told LBC that if people don’t get financial support to get spending soon “the economy could contract by 20 to 25% in the next quarter”.
Dr. Lyons stated that “many of the banks are not fully engaged” in the government’s financial support and so slows the process even further.
“The longer the lockdown goes on, the more a temporary hit to the economy becomes a permanent hit to the economy” the economist warned.
Comparing the UK’s effort to others, Dr. Lyons revealed to Nigel that a lot of other countries are doing better than the UK to get funding to small businesses and individuals.
He said that once the UK has a grasp on managing the finances promised to small businesses and individuals to ensure people being able to spend, “we should be able to start unlocking the economy”.