Kopi Time E19: Professor Sir Charles Bean on the economics of coronavirus

“It’s a mistake to assume that where we are now, is going to be where we are for ever more"  Eminent macroeconomist and former Deputy Governor of Bank of England Charles Bean joins Kopi time to talk about economic policy during a pandemic. He recognises the necessity of lockdown and the associated seismic support measures, but going forward, he favours far more targetted policies. Instead of across the board sales tax cuts, for instance, only highly vulnerable firms and individuals should be supported in the next round of measures. Sir Charles is concerned about the scarring effect of the economic crisis on the current generation of youth about to enter the workforce. To ensure that their lifetime job and earning prospects don’t suffer in a lasting manner, policy support is imperative, including in the areas of job training and incentive for employers. These measures can be financed by long-term government borrowing that locks on to the prevailing low rates. On monetary policy, a few years of low rates look likely, but there would likely be financial stability consequences. Uncertainty around post-Brexit UK lingers, but that is dwarfed by the new set of uncertainties around the pandemic.