The economic impact of pandemic restrictions will be far-reaching and hard-hitting.
For the last year, the UK government has been trying to combat the coronavirus pandemic by essentially shutting down or paring back large parts of the economy. That comes with a big economic cost. When people can’t go to shops, bars, cafes, theatres, community centres, gyms etc. then far less money goes into those places. Hours are cut and jobs are lost, both at the location itself and further along the supply chain (e.g. makers and sellers of gym equipment). People facing a sudden drop in income tend to respond by tightening their belts further, meaning the cycle perpetuates.
There have been two big potential counters to this conundrum. The first is that we live in an age where technology has been able to replace some generally IRL commerce in a way that hasn’t been possible for much of human history. Many white-collar jobs can be done remotely with just a decent internet connection. Groceries, goods and even restaurant meals can be immediately summoned to your house with the use of a nifty app or two. The second counter is the government’s furlough scheme. By funding a portion of the salary of workers who have no work it incentivises employers to keep their staff on the books.
What can be done? Many people would like to see the state step up its financial support for those in the most vulnerable circumstances. This could take many forms - an extension of the furlough scheme, some sort of Universal Basic Income, increases to the minimum wage and/or out-of-work benefits, or even more government-created jobs. The problem is that a lot of these ideas chime against the instincts of the ruling Conservative Party, who tend to align themselves with more free-market economic ideas. In general terms, that means they think prosperity and wellbeing is created more effectively by individuals than by the state.
We live in the same neighbourhood, area, country, and planet with about seven billion other people, and our economies inevitably overlap all the time. That means the economic choices we make might have consequences outside our control, and someone else’s choices might have a direct effect on your economy – even if you’ve never met them before…