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Figures out today from the ONS show that headline inflation over the year to September was just 0.5%. With earlier figures showing a fall in earnings of 1% this means that under the “triple lock” next April would see the basic state pension and new state pension both increase by 2½%. This ...
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In this briefing note, we use comprehensive real-time data on grocery purchases and prices in Great Britain to show how inflation and promotional activity has evolved up until the beginning of August 2020.
The IFS Green Budget 2020, in association with Citi and with funding from the Nuffield Foundation, analyses the huge economic trauma since the March Budget, the much heightened uncertainty over the path of the economy in coming years, and the big decisions confronting Chancellor Rishi Sunak as he ...
The COVID-19 crisis has pushed up government borrowing substantially, meaning that the Debt Management Office will need to sell a much larger value of gilts than normal. In our central scenario, we forecast the total amount to exceed £1.5 trillion, more than double the Budget forecast in March. ...
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The UK faces a long road to economic recovery in the wake of the COVID-19 pandemic. In this chapter, we consider the near-term outlook in depth. Lockdown measures implemented in response to COVID-19 slashed nearly two decades of growth from the UK economy in March and April of this year. Since ...
All indications point to only a thin trade deal (if any) with the European Union after the Brexit transition period ends in December. Despite over four years passing since the referendum, many of the associated economic costs still likely lie ahead. The shock from Brexit will affect different ...
The COVID-19 outbreak and the policy response to it have not just dominated the economic and fiscal developments in 2020 so far; they also set the starting point for the rest of the year and 2021. As long as the virus remains a significant health threat – with no vaccine and no highly effective ...
The COVID-19 pandemic and the public health measures implemented to contain it will lead to a huge spike in government borrowing this year. We forecast the deficit to climb to £350 billion (17% of GDP) in 2020–21, more than six times the level forecast just seven months ago at the March Budget. ...
Choices over benefits policy are never easy. There are unavoidable trade-offs between cost, generosity and incentives. This year offers an opportunity to improve what we’ve got and to make a conscious choice over how generous we want the system to be.
The COVID-19 crisis has led to a profound shock to the labour market, one consequence of which is a rising number of claimants of means-tested benefits and higher entitlements among existing claimants.
This paper explores the challenges and constraints around fiscal stimulus measures in lower-income countries, and in the context of a global pandemic, and puts forward tax, transfer and other government spending options that offer potential for success.
This government has pushed geographic inequalities to the top of the policy agenda. In his very first speech as Prime Minister, Boris Johnson made clear his intent to boost economic performance outside of London and the South East, to ‘level up’ across the country and to revive the fortunes of ...
In this briefing note, we use data from the English Longitudinal Study of Ageing (ELSA) Covid-19 study to examine how the work activity of older individuals has been affected by the pandemic, how older workers’ concerns about their job security vary with their individual characteristics, and how ...
The Chancellor, Rishi Sunak, has announced his intention to hold a Comprehensive Spending Review this year.
As for phase four, the return to normality, Mr Sunak needs to learn one big lesson from policy in the wake of the financial crisis. From 2010 on that policy was dominated by the desire to reduce the deficit. But it lacked a crucial second leg: an actual economic strategy focused on productivity, ...
The COVID-19 crisis is having immediate effects on councils’ budgets as a result of increases in spending on local services and reductions in income from sales, fees and charges and commercial activities.
The COVID-19 school closures forced children and parents to make unprecedented changes to their daily routines. Including the summer holidays, most children will have had a five-and-a-half-month break from physically attending school by the time they returned in September.
The COVID-19 pandemic has had huge impacts on the UK labour market. To protect households from the most severe consequences of this, the government made temporary changes to the existing social security system and rapidly designed and implemented large new schemes. In this briefing note, we take ...
The closures of childcare providers to most families during the COVID-19 crisis have underlined the importance of access to childcare, both to support paid work and to help shape young children’s environment.
Now is not the time to raise taxes; the economy is still weak and the recovery only just starting. But that time will likely come.
Today’s Government Expenditure and Revenue Scotland (GERS) figures show Scotland’s implicit budget deficit increasing to 8.6% of GDP in 2019-20, around 6 percentage points higher than the UK as a whole, largely reflecting higher government spending. The Covid-19 crisis means that figures for ...
In this observation, we use data from an online survey of parents with school-aged children – funded by the Nuffield Foundation and collected during June and July 2020 – to document the patchwork of in-person schooling that children had before the summer. We also explore parents’ concerns ...
On Monday, the government performed a dramatic U-turn on how A Level grades are assigned to students this year. The most pressing issue now is what will happen to university places.
The COVID-19 crisis is increasing councils’ spending and reducing their incomes. This report analyses councils’ forecasts of these pressures and potential policy responses.
We characterize inflation dynamics during the Great Lockdown using scanner data covering millions of transactions for fast-moving consumer goods in the United Kingdom. We show that there was a significant and widespread spike in inflation.
The ongoing COVID-19 crisis poses a significant financial risk to the UK higher education sector. Universities are facing big losses across a range of income sources and investments. These losses could cause serious financial problems, including – in the extreme – insolvency. Most institutions ...
There is growing evidence that economic consequences of the COVID-19 pandemic are particularly negative for young people. On the eve of the coronavirus outbreak, workers aged below 25 were more likely than other workers to be employed in sectors that have been effectively shut down as part of the ...
In this report, we use a novel source of real-time data on households’ finances from Money Dashboard, a budgeting app, to explore the impacts of the crisis so far on earnings, incomes and financial distress, and how they are evolving. We complement this with household survey data to explain and ...
Reports indicate the government is considering a temporary cut in VAT to stimulate consumer demand, possibly targeted at sectors such as tourism and restaurants. Overall the case for a temporary VAT cut now is mixed. It could provide an important fillip to consumer demand if implemented under the ...
Local authorities (LAs) across the country are among those on the front line of the coronavirus crisis. But geographical differences in demographic and economic structures make different parts of the country more vulnerable to different effects of the crisis – on health, on families and children, ...
It is clear that the COVID-19 outbreak – and the public health response to it – will dramatically reduce economic activity in the second quarter of 2020.
The COVID-19 crisis has affected every part of the country – and indeed many other countries. What sets this crisis apart is the many different ways that it is impacting families: while the virus itself is primarily a public health issue, the unprecedented responses it has necessitated mean that ...
Since March, governments across the world have introduced a range of policies to help support businesses, households and public services during the coronavirus crisis. Two of the largest schemes in England relate to the business rates system. First, the government is waiving business rates for the ...
The COVID-19 pandemic led many countries to implement social distancing, lockdowns and travel restrictions, which have resulted in a collapse in the world economy unprecedented in peacetime.
Much of the debate about the impacts of the COVID-19 pandemic, our responses to it, and the longer-term legacy that it will leave has quickly become a discussion about various forms of inequality.
We need policies directly focused on job creation and supporting people - especially young people - to find jobs, writes Paul Johnson.
The COVID-19 crisis has caused drastic changes to most parents’ work lives and other responsibilities. Millions of adults have lost or are forecast to lose their jobs permanently; many more have stopped work temporarily. Others are newly working from home, while many key workers are experiencing ...
The Coronavirus Job Retention Scheme (CJRS) covers 80% of employees’ usual salaries, up to a cap of £2,500 a month, while they are furloughed. From August it will also provide support for employees who return from furlough but work reduced hours. This Briefing Note considers the implications of ...
"School closures don’t merely put progress on educational equity at risk", Paul Johnson writes, "they put at risk years of slow progress towards gender equality in the labour market."
This morning, the ONS published its monthly public finance release for April, giving us an initial snapshot of the public finances under lockdown. It throws the enormous impact of the restrictions on the public finances into sharp relief.
Our research uses up to date real time data from DWP’s Find a Job website to track vacancy levels across all sectors of the economy and regions of the country.
On the 20th March 2020, UK schools closed their gates to all but the children of essential workers and those deemed most vulnerable. As of 15 May, this remained the case; should the progress of the pandemic permit, some more children might be allowed to return at the start of June.
This report looks at normal (pre-lockdown) commuting patterns, what they tell us about who would be affected by continued social distancing on public transport, and what they tell us about how policy can ease public transport congestion in a world of continued social distancing.
On Tuesday (12 May 2020) the Chancellor, Rishi Sunak, announced an extension to the Coronavirus Job Retention Scheme (CJRS), which covers 80% of employees’ usual salaries, up to a cap of £2,500 a month, while they are furloughed.
The coronavirus outbreak and associated containment measures have caused huge economic fallout across the world. The sharp decline in economic activity that is now occurring will depress government revenues and push up public spending. In addition, governments have, appropriately, responded with ...
This brief addresses the fiscal response to the coronavirus pandemic, arguing that governments could make use of the opportunities this shock provides to make changes to tax systems now that might be politically difficult later.
Journal article | Covid Economics: Vetted and Real-Time Papers
The COVID-19 pandemic has led to unprecedented social distancing measures around the world to contain the spread of the virus. The UK has, like many countries, effectively closed down entire sectors of its economy and severely limited activity in many other sectors. This curtailing of activity is ...
The COVID-19 pandemic has affected some sections of the population more than others, and there are growing concerns that the UK’s minority ethnic groups are being disproportionately affected.
The fall in stock markets has reduced the wealth of those who directly hold shares and of those with defined contribution pension pots that are invested in equities.
"We are not all in this together when it comes to the social and economic consequences of the virus and our response to it", writes Paul Johnson.
UK households hold around £230bn of unsecured or consumer debt – including loans, credit card debt, hire purchase agreements and overdrafts. This equates to an average £8,000 per household. The bulk of that debt is held by those on relatively high incomes and in normal times its repayment tends ...
The response to the coronavirus crisis has underlined the critical role of the UK’s key workers, many of whom are in relatively low-paid sectors. This has prompted calls in outlets as diverse as the Guardian and the Financial Times to reassess the working conditions of key workers, both during ...
The coronavirus pandemic, and the measures put in place to combat it, have changed almost everything about how people live their day-to-day lives. More than ever before, life today is being conducted behind the nation’s front doors.
One group which is going to find the next months and years especially difficult are those entering the labour market this year. Experience from previous recessions tells us that graduates will be less likely to find work and will start off in lower-paying occupations than they might have expected. ...
The spread of COVID-19 has led to sweeping changes in the way households work, spend their time and shop. This has led to large changes in spending patterns and, in some cases, rapid price changes. How will changes such as these be reflected in headline inflation measures such as the Consumer ...
When and how should the coronavirus lockdown end? "We need some framework for decision-making, not a set of opinions about the right decision", argues Paul Johnson.
The government is providing £1.6 billion to English councils to help them deal with additional spending pressures arising as a result of the coronavirus pandemic. This is being allocated according to assessments of spending needs in 2013–14, with the vast majority being allocated based on the ...
Tuition fees from international students account for nearly a fifth of total income of the higher education sector. A big drop in international students would imperil university finances.
The coronavirus pandemic will have huge impacts on the National Health Service (NHS). Patients suffering from the illness are placing unprecedented demands on acute care, particularly on intensive care units (ICUs). This has led to an effort to dramatically increase the resources available to NHS ...
The current lockdown and social distancing measures brought about by the coronavirus crisis, coupled with the direct effects of the virus on workers and firms, are having a huge impact on economies in the UK and around the world. Existing literature on the health impacts of business-cycle ...
Many households are experiencing falls in their income as a result of the economic and health policy responses to the coronavirus crisis – often sharp falls. What they normally spend their money on will matter for how well they can weather this storm. If a household typically spends much of its ...
On the eve of the economic crisis caused by the public health response to coronavirus, around 76,000 working-age families were subject to the benefit cap. The cap means that most of these families, and some of those who have since lost employment during the crisis won’t benefit at all from the ...
The lockdown in response to the Covid-19 pandemic has effectively shut down a number of sectors. We find that young people, women and low-earners are the most affected.
The coronavirus pandemic is a public health crisis and global economic shock increasingly affecting lower-income countries around the world – external finance from international institutions and development partners can help plug financing gaps, but may become stretched as many countries around ...
The Chancellor has introduced workable and generous income protection schemes for most employees and self-employed people that lose work as a result of coronavirus. But there are some groups who have seen no increase in protection.
An important part of the UK policy response to the COVID-19 pandemic has been to try to help ensure key workers with children have access to sufficient childcare. Children of key workers are allowed to continue attending school and childcare settings, and both schools and early years providers are ...
The Debt Management Office announced yesterday that in order to finance the Government’s response to the Covid-19 outbreak it intends to auction £45 billion of gilts this month. This would be a record. It is highly likely that the amount that needs to be raised over the new financial year will ...
Short-time work is a subsidy for temporary reductions in the number of hours worked in firms affected by temporary shocks. Evidence suggests that it can have large positive effects on employment and can be more effective than unemployment insurance or universal transfers. This column discusses how ...
By the time the coronavirus lockdown ends, the government's choices "will be utterly different" to when it took office, writes Paul Johnson. "How it makes those choices could prove even more important than the immediate response to the crisis."
With no vaccination available, scientists recommend non-pharmaceutical interventions – in particular, handwashing, social distancing, and the shielding of elderly and vulnerable groups – as the only feasible way of suppressing the spread of COVID-19, and lessening its mortality rate. Such ...
The spread of COVID-19, and international measures to contain it, are having a major impact on economic activity in the UK. In this observation we describe how this impact has varied across industries using data on share prices of firms listed on the London Stock Exchange, and how well targeted ...
The coronavirus pandemic is first and foremost a public health crisis. But it also represents a large and systemic economic shock, with massive effects on both the supply and demand sides of the economy.
The self-employed are more exposed to the large falls in demand resulting from social distancing measures during the coronavirus pandemic and more likely to be living in poverty than employees.
Today (26 March 2020) the Chancellor announced new, very generous support for the self-employed. Those who earn the majority of their income from self-employment and who had average profits of no more than £50,000 over the last three years will be eligible for a taxable grant equal to 80% of the ...
Isabel Stockton, a research economist at the Institute for Fiscal Studies, said: “The response to the covid-19 pandemic has led to a sharp downturn in economic activity. It has also, rightly, prompted a substantial fiscal policy response, the cost of which will add directly to government ...
The funding arrangements for the devolved governments in Scotland, Wales and Northern Ireland do not look well designed to deal with the coronavirus crisis.
There is a clear need to temporarily reallocate some workers but this should be balanced with the need to have the economy ready to quickly resume ‘business as usual’ once the COVID-19 crisis is over.
Over the past decade employment has grown very strongly, from 29 million to 33 million in work (70% and 76% of the working age population). At the same time wages have grown at historically slow rates.
In this observation, we set out some of the most important facts about key workers to help inform the evolving policy response to COVID-19.
Chancellor Rishi Sunak has announced more financial measures to address the impact of coronavirus on the economy.
It looks likely that responding to the coronavirus outbreak (covid-19) will be at the centre of Wednesday’s Budget. We look at some of the options the Chancellor has.
Spring Budget 2020: IFS analysis event 12 Mar 2020

Other coronavirus research

Mobilising revenue: opportunities for lower-income countries during the pandemic

This brief addresses the fiscal response to the coronavirus pandemic, arguing that governments could make use of the opportunities this shock provides to make changes to tax systems now that might be politically difficult later.

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Estimating the COVID-19 Infection Rate: Anatomy of an Inference Problem

As a consequence of missing data on tests for infection and imperfect accuracy of tests, reported rates of cumulative population infection by the SARS CoV-2 virus are lower than actual rates of infection. Hence, reported rates of severe illness conditional on infection are higher than actual rates. 

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