Return to ‘roaring 20s’ must not mask unemployment crisis, warns think-tank

A RETURN to a “roaring 20s” from an economic recovery driven by drinking and dining out must not be allowed to mask rising unemployment, a think-tank has warned.

The Resolution Foundation said that ministers will likely need to support the economy for longer than planned, with the road to recovery expected to be a “bumpy ride”.

A report from the group today says the tougher lockdowns that may be required in the new year to contain the new variant coronavirus could mean the economy is six per cent smaller by Easter than hoped just a month ago.

With vaccines being rolled out, the analysts expect hospitality spending after April to bounce back “very quickly”, in a similar manner to what was witnessed in the US following the influenza pandemic in 1918-19.

But chief executive Torsten Bell cautioned that “the return of a ‘roaring 20s’ feel to hospitality does not mean the whole economy will automatically return to full health”.

He warned that rising unemployment may mean household incomes fall even during a recovery for gross domestic product, a measure of the size of the economy.

The pandemic has seen richer households saving large sums as they stop spending on services, while poorer workers in those industries have lost their jobs and resorted to borrowing to cover day-to-day expenses.

The Resolution Foundation anticipates that a possible hospitality boom driven by the more well-off spending their cash when the restrictions ease will not fully solve the economic challenges.

The experts warn that with the end of the furlough scheme, unemployment will rise and incomes will fall.

“And while everyone rightly wants to get back to normal, no-one should think we came through this crisis only to see the better off eating out while poorer families struggle with higher debts,” the report says.

Just last week, Yale University professor Dr Nicholas Christakis, who researched past post-pandemic social trends for a new book, said the coronvairus outbreak is likely to give way to a “roaring 20s” with lavish spending, parties and a departure from religion.

In his book, “Apollo’s Arrow: The Profound and Enduring Impact of Coronavirus on the Way We Live”, he said the world will experience an economic and social revival to rival that which followed the 1918 flu pandemic, coming into play by the year 2024 as a response to the restrictions on our lives that 2020 has brought.

“During epidemics you get increases in religiosity, people become more abstentious, they save money, they get risk averse,” he said.

“We’re seeing all of that now just as we have for hundreds of years during epidemics.”

He added: “In 2024, all of those will be reversed.”