- Over 1,100 experts have shared with us their concerns about COVID-19 and COVID-impacted areas in the immediate and longer term future.
- This report outlines concerns about the economic impact of COVID-19 and the risk of a recession.
- Experts are also concerned about economic policy and the widening of economic inequality. Some high-income groups may be able to profit from the ensuing economic uncertainty. But people who were already living with low income may be pushed into poverty.
- You can find all our horizon scanning work on COVID-19 here.
Our survey of over 1,100 experts asked them what their most important concerns were in the short (next 3 months), medium (next 3 to 9 months) and long-term (beyond the next 9 months) relating to the COVID-19 outbreak. Their responses were analysed and synthesised. This synthesis comes from survey responses submitted between 3 and 30 April. Experts raised 285 concerns relating to economy and finance. Below are the areas of concerns that experts have relating in this area.
Economic impact and recession
Experts raised nearly 200 concerns about the economic impact of the COVID-19 outbreak in the short, medium and long-term. In the short-term, they question how the possible loss of life from an economic downturn was factored into lockdown considerations. They also question whether potential health impacts from lockdown itself (such as increases in alcohol consumption or decreases in physical activity) have been taken into account when deciding what lockdown measures to put in place and for how long.
Experts suggest that lockdown measures will cause the UK economy to slow down in the short, medium and possibly long-term. For example, job losses and changes to consumer habits could result in deflation. Some experts are concerned about the housing and rental market in the medium and long-term. They note that tenants may go into arrears because of financial issues. This could mean that there is a sudden peak in evictions once the moratorium on evictions is lifted. This could destabilise the rental market and leave some landlords without any tenants or resulting income. Landlords may decide to sell their properties to cover their losses. This would add to the increase of houses already likely to come on the market in the medium-term because the housing market has been less active in the short-term. A flooded housing market would result in a fall in house prices, contributing to further financial issues.
Experts are concerned in the long-term that there is no current Government plan to mitigate the effects of the highly likely economic downturn on businesses or individuals. Some experts suggest that the UK could use the current situation as an opportunity for change. They suggest that the UK could consider prioritising growth in other indicators besides GDP, such as population health, productivity or wellbeing.
Example of a typical short-term concern in this area: That the long-term damage to the economy due to lockdown will have a greater adverse effect on health and social care […] than the pandemic itself.
Experts raised over 50 concerns about economic policy in the short, medium and long-term. In the short-term, experts were concerned about the monetary policies needed to manage inflation, stabilise the stock market and prevent currency depreciation. In the medium and long-term, experts expressed concerns about public spending and public debt. Some suggested that protecting the economy in the medium-term might require bailouts of financial institutions and stimulus packages. They are concerned that there was not enough clarity about how current financial packages were being funded and their long-term economic impact. For example, they are concerned that the UK borrowing money to cover short-term expenses (such as support packages for businesses) could lead to high public borrowing, increasing the UK’s budget deficit. They question how this deficit will be managed over the long-term. For example, they suggest that raising taxes is unlikely to meet the current public spending demands or reduce the deficit. In the long-term, experts were concerned that the UK economy was not prepared for any future shocks. They suggest that the Government needs to ensure the economy is more resilient so that it is not destabilised by future unpredictable world events (such as pandemics or natural disasters).
Example of a typical long-term concern in this area: The manner in which the UK government seeks to withdraw from its economic stimulus measures and how this will affect the long-term structure of the economy (alongside distributional implications).
Some experts are concerned that the COVID-19 outbreak might widen economic inequalities in the long-term. They suggest that some high-income groups may be able to profit from the ensuing economic uncertainty. However, those in more precarious financial positions are likely to experience worsening circumstances.
Experts suggest that people who were already living with low income may be pushed into poverty. This is because they are more likely to have lost their jobs and less likely to have savings. They note that many of those living on low income were still feeling the effects of the 2008 financial crisis. Some groups were seen as more at-risk of worsening circumstances, such as single parents and children in receipt of free school meals.
Experts note that economic effects could be compounded over time. For example, in the short-term a person on low income may lose their job or have a reduction in wages. They may be unable to pay their rent and bills. This could mean they take out high-risk debt or default on payments. In the medium-term this could result in escalating debt and/or eviction. In the long-term, a person with a poor credit rating and/or in a precarious living situation will struggle to access financial services. They may also experience more difficulty in receiving benefits or securing a job if they do not have a fixed address.
Example of a typical short-term concern in this area: Ensuring that low- and middle-income families have been provided with adequate financial support to deal with unemployment and the negative economic impact of the pandemic
You can find rapid response content from POST on COVID-19 here.