I often think my fellow economists are a miserable bunch. Survey after survey has predicted that the UK economy will take years to recover even to pre-Covid levels, with unemployment set to spiral and the fallout from Brexit only getting worse. But as we know, the consensus among followers of the ‘dismal science’ has often been wrong in the past. I’m confident it is far too pessimistic today as well.
To be fair, 2021 has begun with the economy back in lockdown. This could be the final straw for many businesses which have only just survived the crisis until now, especially in hospitality and retail. Nonetheless, two factors have surely tipped the balance in favour of the renewed tightening of restrictions.
The first, of course, is the far more rapid transmission of the new Covid variant, which has increased the benefits of locking down. The threat of the NHS being overwhelmed by Covid patients is now much greater, and the argument that it is ‘only’ the elderly or already infirm who are at serious risk is even weaker.