Alistair Darling urges Rishi Sunak to fight Covid recession 'like a war'

Former Chancellor Alistair Darling has warned the economic effects of coronavirus could last a decade and urged the UK Government to support businesses and jobs “through to the end” as he likened tackling the coming recession to a war.

Mr Darling, who was Labour’s Chancellor of the Exchequer during the 2008 financial crash and subsequent recession, also warned current Chancellor Rishi Sunak that turning the taps off on borrowing would incur a massive social cost that would “be with us for generations to come”.

"It’s a bit like a war,” he said. “You can’t say halfway through it, well, I’m sorry, we can’t afford another battleship or any more tanks. You’re in this and you’ve got to see it through.”

Former Chancellor Alistair Darling has said the economic effects of the pandemic will still be felt well into the next decade.

Mr Darling, speaking on a podcast hosted by web newsite Tortoise, said the coming recession should not be dealt with as if it was any other economic downturn. He warned the full effects of the lockdown earlier this year on the economy were yet to be seen.

“If we don’t do anything, you could be looking at the 1980s and maybe three million people [unemployed],” he said.

“Now, that needn’t happen. I would argue very strongly that what needs to happen is that you need to give the regions, particularly in England, give them budgets because they’re much better at knowing what they can get going fairly quickly, whether it’s housing, infrastructure projects, and so on. If you do all these things, then you’ve got some chance of keeping those unemployment totals down.”

He added: “Nothing is inevitable. But I’m worried, unless an awful lot is going on behind the scenes in secret – if only it was – I think we are going to be in for a very difficult winter.

“If you don’t spend money – especially at a time like this – the costs in the longer run could be far greater than they would otherwise be. So I would urge the present Chancellor to err on the side of doing more to support the economy than he might naturally be inclined to do.”

Mr Darling said the Government had to “get out of the mindset” of not spending money.

"I am very clear that if you do what was practised in the 1930s, actually, when you had a massive recession which became a depression, and you think that the best thing to do is not to incur any more expenditure, in crude terms, the cost will be massive,” he said.

"It won’t just be economic, but it will be social, and it will be with us for generations – and I mean generations – to come.

“We have got to do whatever it takes to support our economy, otherwise you are going to be in for a very, very, very difficult time economically, never mind the social consequences that will come on the back of that.”

He said times like “this is precisely what governments are for” and that when “things are really bad, only the government is big enough to deal with it”.

“This is a crisis, and it is up the current generation of politicians to rise to it – and, without being indelicate about it, I think they’ve got a job of work to do," he said.

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