Boris Johnson claimed today that his plans for UK government investment stand comparison with FDR’s US New Deal in the 1930s.
The graph above compares the spend per head of population in pounds using today’s purchasing power.*
If you look really hard you will see Johnson’s “bold” plan (£75 per head) as a slight smear on the right. Roosevelt spent the equivalent of £4881 per head.
“Ambition were made of sterner stuff.”
The above was written on Tuesday. At PMQs today (Wednesday) Johnson announced that far from £5 billion being the figure he’d first thought of to kick start the economy – perish the thought, even though this is exactly how it had been reported in the press – the real figure was £100 billion.
Assuming that this is not just Johnson channelling Trump – who regularly inflates the numbers he’s talking about as he runs through a sentence “millions, billions, gazillions” rather like a 9 year old for whom all large numbers translate as “lots”- this is, of course, twenty times better than five billion but still barely a quarter of what Roosevelt did, as can be seen here.
There are four other considerations.
1. Roosevelt’s New Deal lasted six years. Johnson’s is spread over ten. So, a quarter as much over nearly twice as long.
2. The impact of the COVID crisis is a much deeper and quicker collapse than even the Great Depression and requires a qualitatively deeper stimulus from the state – not nervous tinkering of this sort.
3. We have a no deal Brexit currently being set up by Johnson’s henchman David Frost, a man who manages to look like Crabbe and Goyle at the same time, which will further throw the UK economy into trouble; so this begins to look less like a New Deal more like a fig leaf to cover the all out onslaught we are going to face on labour and environment standards once the replacement deal with the USA is signed.
4. Its not at all clear how much of this announcement is actual new investment. The billion for schools infrastructure appears to be money that they are simply replacing under a different label having already cut a comparable amount, leaves the capital budget below where it was in 2015-16, even if it were all to be spent in 2021 rather than spread over ten years. (1)
*Thanks to Jeff Lever for the calculations.