UK economists believe that the lockdowns have caused less economic damage than what the pandemic would have otherwise caused. While some believe no trade-off exists between lives and livelihoods, others believe there may be small or larger trade-offs.
Tim Harford, an economist and author, re-tweeted an article on UK’s latest Centre for Macroeconomics (CfM) survey of economists, which aimed at evaluating the members’ response to how the pandemic and mitigation measures affected economic activity and if any trade-off existed between lives and livelihoods.
Economists believe that the lockdowns have caused limited economic damage compared to what the pandemic would have caused in the absence of lockdowns. Some experts opine that the recession could have been 50-70% deeper in the absence of lockdowns and fiscal support, and a fifth of the survey respondents believe that the UK economy is better off due to the lockdowns.
A majority of them also believe that the economic costs of the second lockdown, which commenced on 5 November and is due to end on 2 December, have been limited relative to the milder restrictions imposed in March. A major difference between the two lockdowns is the re-opening of the education sector, with schools, colleges and universities having returned to normal. The UK’s National Health Service (NHS) Test and Trace scheme has also offered new mitigation measures, the survey highlighted.
Lockdowns have caused limited economic damage beyond what the pandemic itself would have caused unabated; economic costs of the current UK lockdown are limited relative to the milder measures employed this summer, @CFMUK survey of economists @voxeu https://t.co/sHCyxNGFtg
— Romesh Vaitilingam (@econromesh) November 26, 2020
Yannis Koutsomitis, a European affairs analyst, shared an article on European Central Bank’s (ECB) minutes of the monetary policy meeting held in October. According to policymakers, the pandemic poses long-lasting effects both on the demand and supply side, Koutsomitis tweeted.
Economic developments have been sluggish and uneven across sectors, the article noted. The service sector, in particular, being hard hit by the restrictions on social activity and movement. Near-term price pressures also remained subdued due to a wakened demand, especially in the travel and tourism sectors.
A bank lending survey for the third quarter of 2020 also found credit standards for firms to tighten and the intention to do the same for households, despite a rise in households’ net demand for loans in the third quarter compared to a fall in firms’ demand. However, the euro area economy is focused at supporting favourable financing conditions and an expansionary fiscal stance, the article highlighted.
#ECB minutes for October monetary policy meeting: Policymakers see possibility that the pandemic might have longer-lasting effects both on the demand side and on the supply side.https://t.co/lb0ZfDj3Gi
— Yannis Koutsomitis (@YanniKouts) November 26, 2020
Samuel Tombs, an economist, shared the latest indicators for the UK economy and society based on several surveys, data, and experiments. The Office for National Statistics (ONS) Business Impact of Covid-19 Survey (BICS) revealed a 3 to 4% hit to the gross domestic product (GDP) from the lockdown 2.0, a painful hit but better than the first.
Initial results from Wave 18 of the BICS that took place between 2 November and 15 November, found that approximately 75% of the businesses had been trading for over two weeks. It also found that about 13% of the businesses had stopped trade and did not intend to start in the next two weeks.
With respect to the social impacts of the coronavirus, work from home remained stable at 30% in Great Britain. Meanwhile, travel to work increased to 56%. In addition, adults continued to shop for essentials, food, and medicines, while 97% of the adults adhered to the mandate of face coverings, according to BICS.
The latest turnover data from the ONS' Business Impact of Covid-19 survey point to a 3-to-4% hit to GDP from the second lockdown. That's much less than the first lockdown, but still a painful hit:https://t.co/TiDjCACJZh pic.twitter.com/IBTPdxCCBi
— Samuel Tombs (@samueltombs) November 26, 2020