The UK Government’s approach to suppressing COVID-19 risks becoming the worst of all possible worlds. Partial measures to half-close the hospitality and other sectors without providing sufficient financial support to the businesses in them will not suppress the rate of infection sufficiently to cut the death rate and protect the NHS, but will almost certainly lead many businesses to close and workers to lose their jobs.
As both SAGE and The Lancet have said, short but deep ‘circuit breaker’ lockdowns are the only way to rapidly reduce the R rate to a level which can then allow the economy and social life to open up again. But they must be accompanied by the generous furlough and business support schemes for which the Chancellor was rightly praised in the spring. Support to the self-employed and those on Universal Credit also needs to be increased.
Yes, this will cost the Treasury money. But, as in times of war, there is no effective economic limit on crisis spending: debt can be absorbed now by the Bank of England and paid back over 25 years or more.
Over the medium term there is no real trade-off between public health and the economy. Only by suppressing the virus will the economy be able properly to reopen. This is likely to require periodic circuit breaker lockdowns; but with sufficient Treasury support those will almost certainly cause less economic and mental hardship than permanent half-measures. Ultimately, exiting this destructive cycle requires a functioning test and trace system, with local health teams, rather than private and centralised companies, in charge.
Professor Simon Wren-Lewis, Emeritus Professor of Economics, University of Oxford
Professor Jonathan Portes, Professor of Economics and Public Policy, King's College London
Professor Daniela Gabor, Professor of Economics and Macro-Finance, UWE Bristol
Professor Michael Jacobs, Professor of Political Economy, University of Sheffield
Dr Jo Michell, Associate Professor of Economics, UWE Bristol