No one would ever have expected a Conservative Chancellor to announce that the state will pay 80 per cent of people’s wages up to the average income. It is something that even Jeremy Corbyn wouldn’t have dared propose before this crisis hit. But the alternative to the package that Rishi Sunak announced last night was mass unemployment. This would have caused huge hardship and meant that even once this virus had passed, the economy would have taken months to get back in gear. Expensive as it is, this package makes a V-shaped recovery more likely.
Businesses have been offered unprecedented levels of help by government. They must now pass that on; and furlough their staff rather than sack them. If they—and particularly larger businesses—don’t do everything they can to keep on as many staff as possible, public opinion will turn viciously against them. There’ll be a clamour for nationalisation and radically higher corporate taxes. The Corbyn manifesto will appear really quite mild in these circumstances.
Business leaders must be sensible. They’ll be contempt for companies that pay big dividends or sign-off on generous executive pay packages while firing staff.
If business isn’t careful, the entire corporate world could end up taking the kind of reputational hit that the banks took in 2008. The economic hit caused by this virus isn’t the fault of any sector, but British business now has a choice about how to respond to this moment. If popular support for enterprise is to be maintained, companies must make the right call.