If there is a recession, the government must protect the vulnerable

Editorial: The energy crisis is likely to have a ‘substantial and long-lived impact’ on the economy

Rishi Sunak is to deliver the spring statement on 23 March (AP)

As the clouds of war gather over Europe – and those are not words with which we expected to start an editorial in the 21st century – Rishi Sunak, the chancellor, is wise to wait before making the next big decisions about managing the UK economy.

By the time of the spring statement on 23 March, it will be too soon to have reached a view about the effect of the invasion of Ukraine on the European and world economies.

Mr Sunak apparently warned the cabinet on Tuesday that the world was facing a 1970s-level oil-price shock, which would have economic consequences. Paul Johnson, director of the Institute for Fiscal Studies, commented that, although the effects of the war are as yet unclear, it is likely to have “a really substantial and long-lived impact on economic performance”. One problem, Mr Johnson said, is that, “having saved everyone’s incomes from Covid, there’s an expectation he’ll do it again; but this is a very different sort of shock”. The Covid recession was V-shaped, straight down and straight back up again; recovering from the energy-price crunch is likely to take longer.