The Guardian’s Perspective on Boris Johnson’s Two Nations: Employers and Employees | Editorial | Opinion

Boris Johnson claims he is a conservative of one nation, uniting the wealthy classes with the masses. The Downing Street leaks indicate a left-wing approach to economics and a right-wing approach to culture. Mr Johnson is posing as the first post-Thatcherite Conservative Prime Minister. His selling point on Brexit was that he was willing to sacrifice the profitability of the company to regain his sovereignty. Yet the Covid pandemic has shown that Mr Johnson is unable to resolve the tension between his party’s free market orthodoxy and the desire to meet the needs of new working class voters.

Before the crisis, the UK economy was characterized by low levels of business investment, a weak skill base, stagnant wages and the zombification of UK businesses, which had 1.2tn of corporate rated debt. Covid presented a chance to reset the business model that saw the wage share decrease as a percentage of the country’s gross domestic product. As providers of capital, investors might think that having a larger share of economic output is a good thing. But businesses also need customers who can afford to buy their goods and services.

The question for Mr Johnson is whether demand in the economy should be profit or salary. Its rhetoric suggests the second while its policies advocate the first. The Covid government’s strategy is to save employers, not necessarily employees. The government has supported businesses with $ 50 billion in state-backed coronavirus loans, but without attaching conditions to save jobs. Since the government will not shamefully name who receives the money from the state, it is impossible to say which companies have benefited from it. If Bank of England loans are any guide, the outlook for workers is grim: Rolls-Royce took out an emergency loan of $ 300 million from the central bank and announced 3,000 job cuts . It is estimated that the taxpayer is struggling for at least 23 billion value of losses.

Over the past seven days it has emerged that UK-owned companies private equity firms will be able to access emergency loan programs guaranteed by the state. Private equity specializes in borrowing huge sums to buy companies after banks have denied them loans. Once in charge, investors can increase their profitability by laying off staff and selling company assets. The pandemic will devastate many businesses. Guildhawk, a leading software translation company, warned the government in March that vulture funds will use the crisis to acquire, strip and neutralize good companies. His warnings have fallen on deaf ears.

While owners of capital are bailed out, support for workers has been withdrawn. Rather than expanding the leave scheme, as in Germany and France, the UK, only viable jobs (those that can be done part-time) will receive state support. Tony Wilson of the Institute for Employment Studies warned those most likely to miss this internship are those with less secure contracts, shorter services (often younger workers), those with the lowest pay and those working in non-union workplaces. The result is that unemployment in the UK will increase by a million by the end of the year. The economy will contract. People with universal credit, little support in OECD comparisons, cannot consume much.

The Conservatives are wary of government intervention, but the state should help keep employees and employers afloat. Red Wall voters who have lent their support to Mr Johnson will not be happy if the economy collapses because he followed his party and allowed unemployment to rise. There is a double whammy. Mr. Johnsons’ new support is in the zones dominated through low-skilled and manufacturing jobs. The coronavirus has hit them hard: they have unusually high levels of workers on leave. Brexit would hit them harder. Mr Johnson could emulate Australia’s right-wing government, which says it will abandon debt and deficit rhetoric and prioritize job creation. But the country needs action, not just words.