BORIS JOHNSON’s new economic plan is said to be 200 times less ambitious than President Franklin D. Roosevelt’s New Deal.
Prime Minister Boris Johnson unveiled new plans to soften the economic impact of coronavirus with a promise to “build build build” yesterday. Speaking in the West Midlands, he pledged to use the coronavirus crisis “to tackle this country’s great unresolved challenges”. As part of a “new deal”, Mr Johnson set out plans to accelerate £5billion on infrastructure projects, such as bridge repairs in Sandwell, digital upgrades to courts, and improvements to local high streets.
Moreover, to underscore his green credentials, Mr Johnson recommitted to planting over 75,000 acres of trees every year by 2025 – and promised £40million to boost local conservation projects and create 3000 jobs, including new Conservation Rangers.
The Prime Minister’s speech comes as BBC analysis found that the UK was the hardest hit of all the G7 major industrialised nations by the virus in the weeks leading up to early June.
In order to repair the economic damage, Mr Johnson is trying to emulate the New Deal policies of the depression-era American President Franklin D. Roosevelt, with a Government that “puts its arms around people at a time of crisis”.
He told Times Radio: “The coronavirus pandemic has been an absolute nightmare for the country.
“But in those moments you have the opportunity to change and to do things better … to invest in infrastructure, transport, broadband, you name it.
“I think this is the moment for a Rooseveltian approach to the UK.”
Between 1933 and 1939, President Roosevelt presided over a huge bout of government assistance – unleashing the New Deal, which included heavy focus on public works projects to put money in peoples hands.
The phrase originates in the former US President’s acceptance speech at the 1932 Democratic convention in Chicago, in which he promised “a new deal for the American people”.
The various measures included support for, and reform of, the collapsing banking industry, a new stock market regulatory agency, moves to boost wages and prices, the creation of massive public works projects and – perhaps most important of all – the launch of Social Security, the American equivalent of National Insurance in the UK.
Taken together, they not only constituted a “New Deal” to help ordinary Americans, they also initiated a new era of government activism, in terms of both intervention and regulation of the economy.
The Government became the largest employer in the US, and even built some lasting assets like the Tennessee Valley Authority.
However, Mr Johnson‘s promise of £5billion of accelerated capital spending on hospitals, schools, roads, rail, prisons, courts and high streets appears to be considerably less impressive than President Roosevelt’s New Deal.
According to a recent report by The Spectator, the total announced by the Prime Minister amounts to just 0.2 percent of the UKs 2019 GDP (£2.2trillion).
By comparison, President Roosevelt’s 1933-39 economic stimulus is estimated by economists Price Fishback and Valentina Kachanovskaya to have represented 40 percent of the USs 1929 (pre-depression) GDP.
According to Forbes, the New Deal cost about $50billion (£40billion) in federal expenditures from 1933 to 1940, excluding functions such as the US Post Office and the State Department.
When adjusted for inflation, the figure amounts to $767billion (£624billion).
The report says: “As a share of the economy, Johnson’s spending plan is 200 times less ambitious than the New Deal.
“It is also far outweighed by Germanys recently-announced €130billion stimulus package, which accounts for nearly 4 percent of the countrys GDP.”
Moreover, despite UK GDP having fallen by 25 percent since the coronavirus crisis started, Mr Johnsons announcement does not include new money.
The £5billion has merely been brought forward from the £600billion previously promised by Chancellor of the Exchequer Rishi Sunak.