If small businesses fail after Covid-19, the big boys will become even more powerful. A radical 1930s policy could be the answer
The economy we knew before the pandemic has disappeared. Rather than simply returning to how things were before the coronavirus shock, we’re set to emerge into a shattered economic landscape. Huge numbers of jobs have been lost and countless small businesses are laden with debt, teetering on the verge of bankruptcy. In the absence of additional government assistance, many of these businesses may disappear forever, further gutting our high streets and hollowing out our local economies.
For better or worse, the pandemic will create a new version of normality, with new patterns of economic ownership. One of the clear dangers we face in the aftermath of Covid-19 is increased inequality: many small and medium enterprises (SMEs) are likely to go bankrupt, allowing further consolidation by the largest firms. Private equity sharks waiting in the wings will snap up distressed business assets for pennies on the pound.
The Bank of England’s answer to this crisis has been to turn on the money taps of quantitative easing. This is an unfocused approach to supporting the economy, which drives up asset prices. QE will make the rich even richer, but does little to increase spending or support the everyday economy of small businesses that are essential for recirculating local wealth.
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