There’s a limit to how much Britain can spend its way out of this crisis

Whatever it takes. These words may soon turn out to be the most expensive in British peacetime economic history. They form Rishi Sunak’s catchphrase, a pledge so awesome that its very mention could rescue the British economy. Such salvation comes at a cost, however.

According to the latest research from the British Chambers of Commerce and the Resolution Foundation, the innocuous-sounding Job Retention Scheme will be used by about half of the private sector. In reality, the cost of the vast wage subsidy could be as high as £40bn for the first three months of operation. Overall, the various official support measures – including the recently announced £750m package for charities – could double the UK’s national debt.

Such a ballooning in the national debt hasn’t been seen since the Second World War. Even though it seems in poor taste to think about money at a moment such as this, the Treasury is right to fret about spending “whatever it takes”, even if there seems to be no alternative.

The danger, though distant for the moment, is that the UK will eventually be unable to sustain such borrowing at realistic levels of interest. After all, much of the rest of the world is trying to do the same thing at the same time. If investors become reluctant to lend to the UK, the only alternative is to debauch the currency and use price inflation to erode the real terms value of the debt – a debt default by stealth. The Bank of England has said it will not countenance that level of printing money, and the strategy wouldn’t work for long, in any case. Sooner or later there would be a reckoning; “whatever it takes” will discover its limits.

Hence the reported tensions between the Treasury and the Department of Health and Social Care. One minister, Mr Sunak, is trying to prevent a crisis in public finances; the other, Matt Hancock, in public health. There is inevitably a trade-off between the two. If virtually everyone stayed home until a Covid-19 vaccine was developed and administered to every citizen, we could be a year away from lifting the lockdown, and there wouldn’t be many jobs for anyone to go back to afterwards.

Alternatively, doing nothing about social distancing and controlling the pandemic would mean a huge and unacceptable loss of lives. Within those extremes lies the right practical balance of priorities. Politically the moment has not yet arrived when the toughest of choices has to be made. But the longer the lockdown, the heavier the financial burden. No economy can pay people to do nothing indefinitely.

Ever since the “whatever it takes” slogan was deployed, successfully, by European Central Bank president Mario Draghi during the eurozone crisis a decade ago, it has attained an almost mystical, unanswerable quality. After Mr Sunak unveiled his two unprecedented packages of support for the economy last month, even the leftist former shadow chancellor John McDonnell could pick few holes in the Treasury’s proposals. Fiscal conservatives kept quiet. With parallel global action by governments and central banks, some order was restored to financial markets. The policy has worked.

In truth, Mr Sunak and the cabinet had little choice but to shred their fiscal rules and throw prudence under a bus. A short sharp drop in economic activity threatened to turn into a decade-long depression. But there is plainly a limit to the length of time the British economy can borrow to survive.