Children in classrooms will aid economy
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.