Why is the government optimistic that the economy will bounce back?
The huge contraction of the British economy from March of last year was based on a deliberate if belated decision to lock down in the face of the Covid crisis.
This is different from previous crises which ultimately resulted from falls in the rate of profit leading to bankruptcies, unemployment and so on.
However the contraction was also far larger than previous contractions—the biggest for 300 years the experts claim. The British economy was particularly badly hit because of its dependence on so-called service industries ever since Thatcher presided over the destruction of much of manufacturing in the 1980s.
Virus has created potential for boom—and bust
Once Covid restrictions were eased or abolished, there was bound to be some recovery as people used restaurants, pubs and other service industries again.
The more optimistic…
