The end of summer, and optimism, now looms for Boris

Paul Montague-Smith

Boris Johnson was elected on a manifesto of optimism, but that all lies in tatters says Paul Montague-Smith, senior counsel – public affairs at MRM

What a month it has been. The exam results season was such a mess that it dominated media and public discussion. It also badly damaged the Government. You don’t mess with children’s futures without blowback.

Most of us will know someone who was affected by the turmoil and will have been perplexed as the fiasco unfolded. Any sense of Government competence appeared to go out of the window, with it seemingly being blown about by events.

One legacy could be that confidence in algorithms of any kind has been dented, with suspicion being a default starting point for the public and politicians alike. Their application and effects across business as well as the public sector might well come under the spotlight in the months ahead.

The political upshot of the shambles is that the Government’s approval rating remains in the doldrums and Conservative backbenchers have become more overtly critical of their government. Public approval has dropped 20 points since April to only 30%, with 49% unhappy with the Government’s record and a majority thinking Boris Johnson is performing badly.

When Parliament returns Labour leader Sir Keir Starmer will almost certainly be aiming to make the most out of the exam fiasco at the first Prime Minister’s Questions. Schools are set to remain a political battleground for the time being. The Government is desperate to get all pupils back to their classrooms, not least because it means more people can go back to work.

But teaching unions aren’t playing ball and, while they no doubt have genuine concerns and frustrations, some see it as an opportunity to force more u-turns, damage the Government and secure a high-profile scalp in education secretary Gavin Williamson.

Normally there would only be two weeks before MPs head off for another recess so the autumn political party conferences can take place. This year, though, with conferences scrapped or virtual, Parliament is set to sit through until the last week of October. In that time Labour will be driving home its campaign to extend the Government’s furlough scheme as swathes more job losses are probably announced before its withdrawal.

We haven’t had much more to go on in the last few weeks to give us a clear steer on how the economy is performing. There have been some encouraging signs, with retail sales rising above pre-pandemic levels in July and the PMI index the highest it’s been since 2019. But with unemployment forecast to possibly hit 12% by the end of the year and the CBI saying manufacturing orders remain severely depressed, betting on a v-shaped recovery still requires a leap of faith.

A big problem for the Government – that is likely to intensify with time – is that its performance in handling the pandemic looks poor compared with other countries. The UK is an outlier in terms of both excess deaths per million and expected loss of GDP. Nerves in Downing Street and the Treasury will therefore be frayed as we head into autumn and winter.

The Chief Medical Officer has emphasised that “going into winter we are going to have real problems with this virus” and it is a “very, very substantial challenge”, which he believes will last at least another nine months. He clearly expects the infection rate to increase in the months ahead, probably to a point where more local lockdowns will be needed and perhaps nationwide restrictions re-imposed. Boris Johnson was elected nine months ago on a manifesto of optimism. Coronavirus has fundamentally changed that and the outlook for the Government is stormy.

Another big cloud on the horizon remains our future trading relationship with the EU, which is as uncertain as it was months ago. Michel Barnier is now downplaying the prospects reaching a deal too. For the financial services sector, even if the big differences on things like state aid and fishing are resolved, progress on assessing equivalence has been excruciatingly slow.

The EU is now saying new regulations in some areas need to bed down before equivalence in them can be assessed, meaning UK based firms are facing the cost and complexity of securing country-by-country authorisation to do business.

One final silver lining – international law firms (which the UK leads in across Europe) are set to do well. What’s the phrase – the lawyers always win?!