Amid the deepening social and economic impact of the Covid-19, the prime minister of the United Kingdom, Boris Johnson has stated that a temporary phase of providing a universal basic income (cash for all from the government) was one of many options under the consideration by the administration. An option to support the workers, who have been left in worsening personal financial conditions primarily because of the coronavirus health crisis, as well as the existing bad economic environment due to the uncertainty around Brexit. Universal basic income (UBI) is a measure that is used by financial administrations and central banks across the world when the economy is in severe crisis, and the employees are not able to earn enough money to keep their personal finances going for their day to day needs.
This process basically involves making regular fixed payments by the government to everyone in an economy with absolutely no conditions and irrespective of the quantity of their regular income. This process is however considered not suitable by financial experts as well as economists and not really been tested outside of pilot programmes in countries such as Finland.
Will it be a successful move?
Rishi Sunak, the new chancellor of the exchequer of the United Kingdom, who also presented the budget of the country on 11th March 2020 is making continuous effort to protect the economy from the Covid-19 onslaught. He announced a package of around £350 billion in terms of government spending and loan guarantees on 17th March 2020, the idea of which was to support the distressed business, especially small and medium enterprises who keep the economy running on a day to day basis, by providing them funds at an extremely low cost.
Now, as the reports around this new scheme of the Government’s Cash for All Scheme are doing the rounds, the exchequer and the Bank of England, as well as the administration are being questioned about the steps to be taken to help those citizens of the country, who have been traditionally self-employed, including people who work as a part of gig economy, such as artists, actors, musicians and other such performers who showcase their work as a part of huge events, which stand cancelled currently, and also the people who have been fired from their jobs primarily because of the economic distress caused by the Coronavirus crisis and the uncertainty around the government’s ability to secure a new trade deal, as the country is now in a transition phase after formally exiting the European Union. Answering these questions, which have come from the opposition, as well as the concerned members of his own party, Mr Johnson responded by saying that this is just one of many ideas being considered to fight the outbreak of Covid-19 and the economic damage it has been causing. He reinforced upon the move made by Rishi Sunak previously, mentioning that It was important that people understand the true value for them, in the support package that has been declared by the exchequer. He also stated that the Bank of England and the administration would do everything that is possible, to help support the families and businesses, but the Government is also facing challenges to take quick action regarding this. Many families facing a financial squeeze may not be able to afford to wait weeks for new support schemes to be rolled out.
This crisis will overshadow Brexit in defining Boris Johnson’s rule
A few weeks prior to the current coronavirus outbreak, Boris Johnson was riding high after being re-elected as the prime minister of the United Kingdom, when his party won an overwhelming majority to lead the House of Commons in the Parliament of the United Kingdom, which led him to get “Brexit Done”. This was followed by some stern steps being taken up by the UK administration and the negotiators in trying to obtain the best trade agreements for the country after its previous trade deals under the European Union Bloc would be nullified, post the ending of the transition period.
This was all overshadowed, with the coronavirus spread across the world, which reached the United Kingdom by the first week of February, and currently, the country is going through the community spreading phase of the virus. This has led to health as well as an economic crisis, that is likely to define the Boris Johnson’s regime as the Prime Minister of the United Kingdom.
The UK administration has remained strong on its stance and stated that that every decision, has been taken to contain and fight the outbreak of the virus in the country, has been first been discussed with experts and the epidemiologists, as well as has been taken on the principles of Science. The government has also constantly maintained its statement that it would be better and the right thing to take decisions slowly and steadily to control things, in conservatism, rather than to be forced into making sudden overreaction that could also lead to mass hysteria in the country. Mr Johnson has insisted on and acknowledged the fact that while saving lives is the most important task for the government, it also has a responsibility to protect people’s livelihoods and their jobs, that could give them a sense of security for the future in these tough times. Mr Johnson has been really conservative in his approach, even though his predecessors have suggested that he is quite the risk-taker.
The USA too considering similar “cash for all” package
The Trump administration too is reportedly considering a new possibility in its bid to fight the economic distress being caused by the coronavirus. It is planning to send direct cash or cheque payments to the citizens of the United States of America in the coming weeks to support them in fighting against any personal financial distress. As per a statement made by Treasury Secretary Steven Mnuchin as a part of a big stimulus package. The total cost of this package is expected to be around US $1 trillion. The same day, Rishi Sunak, the UK Chancellor, announced his economic package to support the British citizens.
This has come after the reports surfaced that unemployment rate in the USA could increase even further, after it displayed a 3.5 per cent rise in the month of February, displaying signs of tough times the citizens would go through. The package will need to be approved by the American Congress, followed by the Senate, after which, the President could sign the order to release the payments, though the whole process could take up to a couple of weeks before execution.
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