COVID-19

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 pa

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.

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 hospitals in treating these patients, involving reorganisation of hospital facilities, redeployment of existing staff and a drive to bring in recently retired and newly graduated staff to fight the pandemic.

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 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 working to ensure wraparound care outside of school hours. Non-working partners, or those working from home, are also expected to provide childcare for key workers in some families.

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 be the highest, as a share of national income, since 2009–10 and it could even exceed that peak. With an increasing amount of gilts set to be bought by the Bank of England the public finances will in future be even more exposed to changes in short-term interest rates.

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 measures, when extensively and strictly enforced, appear to have been effective in stemming the spread of the virus in South Korea and China, and there are promising early signs of their effectiveness in Italy too.

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."

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 government support for workers and companies is in light of this.

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 average profits they reported across the three years from April 2016 to April 2019, up to a cap of £2,500 per month, if they report that their income has been negatively impacted as a result of coronavirus.

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 borrowing.

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.