UK’s plan to restart economy is stalling

Bloomberg

The British government’s call to restart the economy may have sounded good, but there’s little evidence the country is taking heed.
In the week when Prime Minister Boris Johnson said it was time to get back to work, some parts of the economy are humming along. What’s less clear is whether his decision to ease lockdown restrictions made much difference.
Activity on construction sites is growing and factories are cranking up output where they see demand. Yet this has been happening gradually for weeks, as businesses devised working practices that avoid spreading coronavirus. Those still in a state of paralysis—restaurants, pubs and manufacturers whose markets have collapsed—have less reason for optimism.
“The clear guidance to go to work if you cannot work from home is not yet backed up by guidance that makes this possible in many work environments,” said Justin King, the former chief executive of supermarket chain J Sainsbury Plc and a current non-executive director of Marks & Spencer Plc.
With other European governments opening up economies, Britain is trying to follow suit without risking a spike in cases after country recorded more deaths than anywhere else on the continent. Chancellor of the Exchequer Rishi Sunak said the UK is facing a significant recession after the latest data showed the economy shrank almost 6% in March.
That balancing act was highlighted when Johnson’s call was followed by Sunak extending stay-at-home salary coverage for millions of workers. The move throws another lifeline to businesses that otherwise risk failing, yet prolongs dysfunctional status quo. Manufacturers have little interest in resuming normal production when there’s no market for the goods on offer. The government’s additional help paying salaries of workers stuck at home gives them one less reason to go looking for new customers.

“The extension of the furlough scheme will allow companies to restart more cautiously, stagger production and see what works,” said one executive in the auto industry, who asked not to be identified by name.