Sunday Mirror

Chil­dren in class­rooms will aid econ­omy

- BY SI­MON FRENCH, CHIEF ECONOMIST, PAN­MURE GOR­DON United Kingdom

THE lock­down in spring knocked about 20 per cent off the UK’s eco­nomic out­put so if we have a lock­down a third of the length – the month that is be­ing pro­jected – then we es­ti­mate a five per cent knock on the UK econ­omy.

That’s not the higher end of the es­ti­mate, it’s the lower end. And that’s be­cause schools, col­leges and uni­ver­si­ties are stay­ing open and some busi­nesses have been able to bet­ter pre­pare, so there is some adap­ta­tion.

The rea­son why schools, col­leges and uni­ver­si­ties re­main­ing open helps the econ­omy is not the ini­tial im­pact, but the se­condary im­pact that it al­lows par­ents to go to work rather than stay at home and look af­ter their chil­dren.

So the sec­ond or­der im­pact of ed­u­ca­tion stay­ing open is an en­abler of eco­nomic ac­tiv­ity.

A lot of firms in the hos­pi­tal­ity, en­ter­tain­ment and leisure in­dus­tries have less cash and may be more re­luc­tant to now take on loans.

That be­ing said, the amount of cash re­serves a lot of the hos­pi­tal­ity in­dus­tries have got left is run­ning out, as is the amount of time they have got left be­fore they shut their doors for good.

The im­pact on un­em­ploy­ment will de­pend on how much sup­port the Trea­sury is will­ing to of­fer.

The more gen­er­ous a job sup­port scheme is, the more we hope we will avoid very high lev­els of job­less­ness.

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