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.
These measures are almost certainly denting the economic impact, but they’ve not removed it entirely. The financial losses caused by pandemic restrictions are significant: by May, the New Economic Foundation reckons one-third of Britons will not have enough income to meet their everyday needs. This will have all sorts of negative knock-on effects: low incomes correlate to poor mental and physical health and low senses of wellbeing. Certain social groups - young people, women, working-class people, BAME people - are more likely to be negatively affected than others. That means the UK is facing widening social inequality and with it increasing resentment and feelings of injustice.
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.
Read our explainer on: economic status in society.
