Weekly Economy Summary

COVID-19: Weekly Economy Summary – 13 May

The Economy Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

GDP 

UK gross domestic product (GDP) is estimated to have grown by 2.1% in March 2021, the fastest monthly growth since August 2020, as schools in some parts of the UK reopened throughout the month. March’s GDP is 5.9% below the levels seen in February 2020, and 1.1% below the initial recovery peak in October 2020. Latest estimates also show only small revisions to GDP in January (now negative 2.5%, from negative 2.2%) and February (now growth of 0.7%, from 0.4%). 

Economic outlook 

NIESR central forecast for UK economic growth in 2021 has been revised up to 5.7%, compared to 3.4% in February, with 4.5% growth forecast for 2022. The significant upward revision reflects a better-than-expected first quarter – a greater resilience to further lockdowns – and the large rise in Covid-related public spending in the 2021-22 fiscal year announced in the March Budget.   

The poor Covid-19 performance has greater permanent cost for the UK compared with other major economies. The size of the economic contraction means that the level of GDP is nearly 4% lower in 2025 than NIESR had forecast it to be before the Covid-19 pandemic, equivalent to around £1,350 per person per year (2018 prices) falling further behind the US and Germany as a result. 

Thanks to the extension of furlough and other support measures to the autumn, NIESR now forecast unemployment to peak at 6.5% in the final quarter of this year (compared to 7.5% in February). This central forecast is compatible with an assumption that around 450,000 of those remaining on furlough in September will not be taken back after the scheme ends. 

Income growth and a degree of forced savings under lockdown provide a strong basis for a consumption growth forecast of 5.9% in 2021. NIESR forecast household saving then to fall to a level higher than that seen before the pandemic but close to historical averages: a faster or further fall constitutes the principal upside risk to our consumption and GDP forecasts in 2021. 

NIESR’s central forecast is for CPI inflation to rise over the coming months, reaching 1.8% in the final quarter of 2021 before falling to 1.5% at the end of 2022 and settling just below its 2% target between 2023 and 2025. Bank Rate is not forecast to rise until 2023 but there is considerable uncertainty regarding both the direction and instruments of monetary policy.   

Double jobs and mental health crisis facing young people risks outlasting the pandemic 

Young people have experienced the largest employment hit and sharpest increase in mental health conditions of any age group during Covid-19 in a ‘double crisis’ that risks outlasting the pandemic, according to a report by the Resolution Foundation. The report, Double Trouble, examines the worrying trends in young people’s mental health in the run-up to and during the crisis, their links to changes in the labour market, and the risks posed to young people’s post-pandemic living standards. The think tank recommends that the government intensifies efforts to keep young people in work by expanding and extending the Kickstart Scheme, and ensures that access to mental health support is strengthened in the period after pandemic.  

Business confidence 

The success of the UK’s vaccine rollout has also influenced an increase in service sector confidence, which has risen to its highest level in over a year. BDO’s latest services optimism index shows that confidence among businesses in the service sector hit a fourteen-month high in April. Businesses in other sectors also recorded improved optimism, while BDO’s output index showed a month-on-month increase in debit and credit card spending in line with the reopening of non-essential retail last month. 

Weekly Health Summary

Covid-19: Weekly Health Summary – 13 May

The Health Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Covid-19 spread 

On Monday the UK COVID-19 alert level moved from level 4 to level 3 in reflection of Covid-19 case numbers, deaths and hospital pressures have fallen consistently. In a joint statement, the UK Chief Medical Officers warned that despite the drop in level, Covid-19 is still circulating and ‘we all need to continue to be vigilant.  

This comes as findings from the Imperial College London and Ipsos MORI show infections have halved since the last REACT-1 study in March, with only 1 in 1,000 people infected. The main findings from the eleventh round of the REACT study show that between March and May national prevalence has dropped by 50% from 0.20% to 0.10% The data showed that the vaccination rollout continues to impact positively on prevalence. The study found a divergence between the prevalence of infections and hospitalisations and deaths, suggesting infections may have led to fewer hospitalisations and deaths since the start of the vaccination rollout.  

Care backlog 

NHS England has announced a new £160 million accelerator initiative to tackle waiting lists, by increasing the number of tests and treatments and by developing a blueprint for elective recovery. This comes as waiting list figures published this week show that there are currently 5 million patients are waiting to start elective treatment.  

NHS Providers has called the new initiative is important, Chief Executive Chris Hopson. He said: ‘Trust leaders are telling us that, in the places with the biggest challenge, getting through the backlog could, on current trajectories, take between three to five years. We know this is unacceptable and that the NHS needs to develop a bold, radical, plan to go a lot faster, with appropriate extra funding from the government.’ 

Nuffield Trust’s Deputy Director of Research Dr Sarah Scobie has said: ‘It is now very clear that the NHS will need much greater support from the government to aid the service and exhausted staff to work through a frightening level of postponed care…New funding announced by NHS England to support pilot areas to innovate and identify ways to speed up efforts to tackle the backlog of care is welcome. But additional staff and resources will not be easy to find given the NHS will need to prioritise urgent care, remain responsive to hospitalisations for Covid and continue to roll out the vaccination programme across the population.’ 

Mental health 

On Monday the Government announced £17 million for mental health funding in schools and colleges to help them recover from the challenges of the pandemic. Up to 7,800 schools and colleges in England will be offered funding worth £9.5 million to train a senior mental health lead from their staff in the next academic year, part of the Government’s commitment to offering this training to all state schools and colleges by 2025. Funding also includes a new £7 million Wellbeing for Education Recovery programme, which provides free expert training, support and resources for staff dealing with children and young people experiencing additional pressures from the last year – including trauma, anxiety, or grief. 

Announcing the new funding, Minister for Mental Health, Nadine Dorries, said: ‘It is essential that children and young people can access the support they need and this extra funding further cements our commitment to their wellbeing, equipping them with the tools to look after their mental health’. 

Research from the Centre for Mental Health published this week found that 10 million people, including 1.5 million children and young people, in England will need support for their mental health as a direct result of the pandemic over the next three to five years. Based on an analysis of over 200 high-quality studies from around the world, the report identifies key groups of people who face an especially high risk of poor mental health as a result of the pandemic. These groups include people who have survived severe Covid-19 illness (especially those treated in intensive care), those working in health and care services during the pandemic, people economically impacted by the pandemic, and those who have been bereaved.

Weekly Health Summary

Covid-19: Weekly Health Summary – 6 May

The Health Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Vaccine rollout  

The Covid-19 vaccine rollout reached 50 million administered doses this week. More than 34 million people have had at least one jab while 15 million have had both doses of the vaccine. Data from Public Health England (PHE)’s real-world study shows the vaccines are already having a significant impact in the UK, reducing hospitalisations and saving more than 10,000 lives in England alone by the end of March. The Government remains on track to offer a jab to all adults by the end of July. Vaccines Minister Nadhim Zahawi said: ‘The UK’s vaccination programme has been a huge success so far with more than 50 million doses administered – a fantastic achievement. We have one of the highest uptake rates in the world and over 15 million people have now received 2 doses and maximum protection from this dreadful virus.’ NHS Providers have said that the 50 million figure is a ‘remarkable achievement’, but have urged everyone to carry on following social contact rules as ‘we still have a long way to go before we reach our next big milestone of offering all adults their first jab by the end of July.’ 

The Government has announced a new testing centre to fast-track Covid-19 variant vaccines. The Government will invest £29.3 million through the Vaccines Taskforce in Public Health England’s new testing facilities at Porton Down, to assess the effectiveness of existing and new vaccines against variants of concern. Health Secretary Matt Hancock has said that the labs will help ‘future-proof country from the threat of new variants’.  

Female health and care staff 

NHS Confederation has published a survey which shows that the physical and mental wellbeing of female health and care staff in England significantly worsened as a result of working through the COVID-19 pandemic with a marked deterioration since last summer. The poll was carried out by the NHS Confederation’s Health and Care Women Leaders Network in February and March in the aftermath of the deadly peak of the virus in January. It found that more than 80 percent of female respondents who completed the new survey – including nurses, doctors, managers, admin staff, and allied health professionals – reported their job had a greater negative impact than usual on their emotional wellbeing as a result of the pandemic, up from 72 percent last summer. The results also showed 65 percent reported a negative impact on their physical health – a 13-percentage-point jump from the last survey. 

Rebecca Smith, managing director of NHS Employers, which is part of the NHS Confederation, said: ‘These findings again highlight the burdens faced by the female health and care workforce as a result of working through the COVID-19 crisis… We now need additional investment from Government, coupled with the existing and ongoing direct support by health and care organisations, to make sure the female workforce is properly looked after. As we come out of this crisis we must continue to do all we can to protect and support our staff.’ 

Mental health  

Data from the Office for National Statistics (ONS) found 1 in 5 adults experienced some form of depression in early 2021, between January and March. This is an increase since November 2020 and more than double that observed before the coronavirus pandemic. Younger adults and disabled adults were more likely to experience some depression, whilst women aged 16-29 were more likely to experience depressive symptoms than men of the same age. Mind, the mental health charity, has said: ‘We cannot underestimate the impact that the pandemic has had on the nation’s mental health – whether that’s bereavement, the devastating loss of life, the impact of lockdown, or the impact of the latest economic recession which may have affected our jobs and livelihoods.’ 

Weekly Economy Summary

COVID-19: Weekly Economy Summary – 6 May

The Economy Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Older workers during the coronavirus (COVID-19) pandemic 

While the impact of the coronavirus (COVID-19) pandemic has been greatest for younger workers, recent ONS statistics showed that older workers aged 50 years and over have been affected to a greater extent than those in the middle age groups. From December 2020 to February 2021, those employees aged 50 years and over were more likely to report working fewer hours than usual (including none) in the past week because of the coronavirus than those aged under 50 years, with those aged 65 years and over the most likely to say they had worked reduced hours. Among older employees working reduced hours, the 65 years and overs were the most likely to receive no pay and the least likely to receive full pay. 

Over a quarter of furloughed employments are people aged 50 years and over (1.3 million),  with 3 in 10 of older workers on furlough thinking there is a 50% chance or higher that they will lose their job when the scheme ends. Moreover, older people who become unemployed are more likely to be at risk of long-term unemployment than younger people. In December 2020 to February 2021, 29.9% of unemployed 50 years and overs were long-term unemployed compared with 18.9% of those aged under 50 years (seasonally adjusted). Previous research has shown that the more time spent out of work, the less likely someone is to return to employment, and the likelihood of returning to work decreases with age. 

UK’s rising debts ‘can be coped with’ 

The Institute of Economic Affairs (IEA) has said no emergency measures are needed to pay off the UK’s £2 trillion debt, with the think tank advising Treasury officials to focus on controlling spending and introducing measures to boost growth. In a report published on Monday, the IEA said debt incurred during the coronavirus pandemic “can be coped with” and argued against trying to reduce it too quickly. Inflation is a real danger, but an “honest government” can work to protect against this eventuality. The authors of the report state: “Clearly steps should be taken by government to curb spending and behave extra prudently. Our central point is that large-scale debt is far from unknown in our economic experience. And it would be misguided and futile to jump to tax-raising measures. The debt can be coped with and the best way of doing that is to encourage economic growth.”  

Economy and society indicators  

The Office for National Statistics (ONS) has published research on the impact of the coronavirus (COVID-19) on the UK economy and society between April and May. It showed that the percentage of businesses currently trading has increased from 77% in early April to 83% in late April 2021. This is now at a similar level to that seen in mid-December 2020 (Business Insights and Conditions Survey (BICS)).  

For retail footfall, it found in the week to 1 May 2021, UK retail footfall saw a slight weekly decrease of 2% but remained much stronger than the levels seen earlier in the year, and at 74% of its level in the equivalent week of 2019. The recent rise in retail footfall is in line with the easing of lockdown restrictions in England on 12 April 2021, which allowed non-essential shops across the country’s high streets and shopping centres to reopen.   

The number of people traveling to work has also increased. The proportion of working adults that had traveled to work in the last seven days was 60%. This proportion has been gradually increasing since mid-February (44% in the period 10 to 14 February 2021). 

Another ONS release on the coronavirus pandemic UK businesses and the economy, has found the proportion of businesses’ workforce on furlough leave has fallen from 17% in late March 2021 to 13% in mid-April 2021, as a result of coronavirus restrictions continuing to be relaxed across the UK. The wholesale and retail trade industry expects the highest percentage of its workforce to return from furlough to the normal workplace in the next two weeks, at 29%. 

It also found that the main challenge reported by currently trading businesses for exporting and importing continues to be additional paperwork, at 37% and 42% respectively. The larger business reported more exporting challenges, while smaller businesses had more importing challenges. 

Interest rates 

The Bank of England (BoE) will set interest rates today amid the backdrop of an economic recovery as the country slowly emerges from lockdown. Reuters predicts that the BoE will say Britain’s economy is heading for a much stronger recovery this year than it previously expected and it might start to slow its pandemic emergency support. The BoE forecast in February that the world’s fifth-biggest economy would grow by 5% in 2021, having slumped by 10% in 2020. That was a bigger hit than in most other European economies after Prime Minister Boris Johnson was slower to impose a coronavirus lockdown and had to keep it in place for longer in an economy heavily reliant on face-to-face consumer services. But many economists say Britain is now set to grow by more than 7% this year, boosted by its fast COVID-19 vaccinations.

Weekly Economy Summary

COVID-19: Weekly Economy Summary – 29 April

The Economy Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Economic outlook 

Independent, business-led coalition which aims to provide ‘new ideas to ensure that the UK emerges from the pandemic a stronger and fairer economy’ published its final findings. The report, ‘Ambition 2030’: A Partnership for Growth, argues that the pandemic has had a bigger impact on the UK economy than any event in the last 300 years, and sets out policy recommendations including the creation of at least one new globally competitive industry cluster in every part of the UK by 2030, a commitment to develop a Great British Supply Chain, a ‘Help to Train’ scheme to assist in halving the projected skills gap by 2030, a detailed plan for the decarbonisation of homes over the next fifteen years and the creation of a new Community Infrastructure Endowment Fund to match-fund business investment in communities and the introduction of a Wellbeing at Work Guarantee. 

Despite this hit, the UK economy is expected to grow even faster than that of the United States this year due to the vaccine programme delivering the speediest recovery since the Second World War, according to a forecast from Goldman Sachs. The forecast says British GDP is predicted to grow by 7.8% this year, while the US will see only a 7.2% growth. Meanwhile, economists at Consensus Economics expect the UK economy to grow by 5.4% this year, compared to the 4.2% expected in February. 

Similarly, the Bank of England’s deputy governor Ben Broadbent has said that the UK’s economy will see “very rapid growth” over the next couple of quarters, driven by an increase in consumer spending after lockdown. According to the BoE’s forecasts, people will spend about 5.0% of their Covid-19 savings, though Broadbent added that it was “possible” they would spend more. “The burden of proof it seems to me should be as to why that wouldn’t happen, rather than why it would, so I have tended to be on that more optimistic side,” Broadbent said. 

Despite increasing optimism over the UK’s recovery from the pandemic due to the pace of the vaccination programme, the Bank’s policymakers have been divided over the UK’s prospects for a long-term recovery. But Broadbent joins Andy Haldane, the BoE’s chief economist, in the optimistic camp, though he warned that a “roaring twenties” style recovery was far from assured. 

Unemployment 

Resolution Foundation examined the impact of the crisis on older workers, assessed the impact of previous crises, and placed this crisis in the context of longer-term trends in employment among older workers. Although workers aged under 25 have seen by far the largest fall in employment in the past year, workers aged over 50 have seen the biggest decline in employment since the 1980s due to the impact of the Covid-19 pandemic. The fall in the employment rate among the over-50s was twice as big as the decrease for workers aged 25 to 49, with older workers also taking longer to return to employment. The Resolution Foundation has urged the Government to ensure that its extensive Covid employment support schemes can be tailored to the needs of older workers, while retraining opportunities should be extended. 

 

Weekly Health Summary

Covid-19: Weekly Health Summary – 29 April

The Health Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Labour calls for NHS rescue plan  

New analysis from the Labour Party has revealed the huge increase in waiting lists over the past 12-months, with hundreds of thousands of people waiting more than the 18-week maximum for treatment and thousands more waiting over a year. Over 366,194 patients are waiting more than a year for treatment. In January 2020, the number waiting over a year was just 1,643. Overall, the number of people waiting more than a year for treatment now compared to before the pandemic hit has risen over 200 per cent. The Party has called for an NHS rescue plan that would see patient care prioritised in the recovery from the Covid pandemic, it includes a quarterly plan on the actions being taken to bring down waiting lists, increased planning on staff and equipment, and a strengthening of the NHS constitution to eliminate waits over 52-weeks and offer a cast-iron guarantee. 

NHS Providers have called Labour’s analysis ‘concerning’. It said: ‘Trust leaders are deeply worried about the size of waiting lists, not just for operations and diagnostic testing but for all types of care including mental health services. Despite how quickly trusts are working to deliver for all patients, there are signs that tackling the backlog could take between three to five years on current trajectories.’ 

Covid-19 vaccine roll-out 

42 and 43-year-olds were invited to get their Covid-19 jab this week as Health Secretary Matt Hancock praised the continuing vaccine roll-out. Speaking to the Downing Street press conference, Hancock highlighted that uptake of the first dose among the over 50s is ‘phenomenally high’, at over 95%. The effectiveness of the vaccine is also strong with Office for National Statistics showing that 7 in 10 adults have protective Covid-19 antibodies.   

Additionally, encouraging data from Public Health England published this week shows that one dose of the COVID-19 vaccine reduces household transmission by up to half. It highlights that those who become infected 3 weeks after receiving one dose of the Pfizer-BioNTech or AstraZeneca vaccine were between 38% and 49% less likely to pass the virus on to their household contacts than those who were unvaccinated. 

Moreover, it has been confirmed that the Government’s Vaccines Taskforce has purchased an additional 60 million doses of the Pfizer/BioNTech vaccine. The extra doses have been secured to help support the booster Covid-19 vaccination programme beginning from Autumn. It is expected that the booster programme will be to protect the most vulnerable ahead of winter.  

NHS Confederation’s Chief Executive Danny Mortimer has said that the news on the vaccine rollout gives us ‘another source of hope and offers reassurance’. However, he said that we must not overestimate public protection against the virus and the tragic scenes in India show that ‘no country can be an island in tackling the pandemic’, as Covid-19 variants still spread.  

Social care reform  

An open letter, from 26 signatories including Care England, Age UK and the NHS Confederation, to the Prime Minister has called for a 1948 moment for adult social care to establish a long-term and sustainable future that will be to the benefit of all citizens and the economy. It highlighted that social care has been on the front line of the COVID-19 pandemic with a tragic number of deaths in care homes, over 30,000, and staff, nearly 900. It says that the social care sector is ‘on its knees’ following the pandemic, and is in desperate need of reform.  

Likewise, health and care think tanks, Health Foundation, The King’s Fund and Nuffield Trust have sent a joint letter to The Times which calls for social care reform proposals to be brought forward in the Queen’s Speech. It says that social care reform requires a long- term strategy and investment. The underpaid workforce must also be fairly rewarded, expanded and supported to develop new skills whilst thousands of overstretched care providers will also need stable funding.  

Health inequality in Wales 

 36 organisations from across health, social care, transport, and housing, including the Academy of Medical Royal Colleges in Wales, Shelter Cymru, the British Medical Association have signed up to a joint paper that calls for urgent Welsh Government action on health inequalities. This comes just a week before the Senedd election on May 6th. It argues that the incredible hardship inflicted by the COVID-19 pandemic has not been equally felt by individuals, families, and communities across Wales. The paper calls on the next Welsh Government to (1) publish an ambitious cross-government strategy and delivery plan to tackle inequalities, (2) invest in long-term prevention across all sectors, especially housing, education, health, energy, and transport, and (3) work in partnership with people and communities to change lives for the better. 

Weekly Economy Summary

COVID-19: Weekly Economy Summary – 22 April

The Economy Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Unemployment 

Headline indicators for the UK labour market for December 2020 to February 2021 show employment was 75.1%, unemployment was 4.9% and economic inactivity was 20.9%. The UK unemployment rate was estimated at 4.9%, 0.9 percentage points higher than a year earlier but 0.1 percentage points lower than the previous quarter. The redundancy rate for the latest quarter was estimated at 7.3 people per thousand employees, which is down from the record high of 14.2 people per thousand employees in the previous quarter (September to November 2020). 

Employment among 18- to 24-year-olds continued to fall, dropping by 5.1 percentage points on the quarter, while there was also a further rise in young people moving into economic inactivity, meaning they stopped looking for work. Payroll data shows the number of young workers has fallen by almost 500,000 since January 2020, accounting for three-fifths of all employee jobs lost. The number of job vacancies increased by 16% between February and March, suggesting that the labour market is starting to thaw as some parts of the economy recover.                                                             

While the latest data hints at some green shoots of recovery, the Resolution Foundation warns that the UK faces a huge task in getting the economy back to normal – such as closing its 6.2 million ‘Covid employment gap’. This gap includes the 827,000 fall in payrolled employment since the pandemic started (between February 2020 and March 2021), an estimated 600,000 fall in self-employment over this same period, and the 4.7 million employees who were fully or partially furloughed in March, according to separate ONS data. 

Concerns over Inflation Rise  

UK inflation jumped in March, driven by the higher cost of petrol and clothes in a signal that prices are moving to an upward trajectory as the economy recovers from the coronavirus pandemic. The Office for National Statistics (ONS) said the consumer prices index rose to 0.7% last month, up from 0.4% in February. 

The British Chambers of Commerce published new research which shows a rising number of firms expecting their prices to increase significantly in the coming months. The figures also document growing concern among businesses over rising inflation. The survey shows that two in five businesses (38%) expect to see their prices increase in the next three months, an increase from 25% in the previous quarter, while the balance of manufacturing firms expecting the price of their goods to increase over the next three months rose sharply to its highest level since Q4 2017. The figures also demonstrate that nearly 1 in 3 (30%) businesses cite inflation as a cause of concern in the coming months, up from 1 in 4 (25%) in the previous quarter. 

Income shocks 

UK households are far more likely to have experienced a severe income shock during the coronavirus pandemic than their French or German counterparts, and are subsequently more likely to have taken on additional debt as a result, according to research by the Resolution Foundation think tank. In households where at least one person has fallen out of work, the report says that 41% have suffered a severe income fall of at least 25%, compared to 20% in France and 28% in Germany. One in three (33%) UK households have reported having to cut back on their spending compared to 23% in France and 21% in Germany, concluding that the financial resilience of UK households must be addressed in order to offer them greater protection in the face of a future economic crisis. 

Unlocking of the economy 

Data published by the ONS provides an indication of the extent to which some economic activity is resuming following the reopening of non-essential retail and outdoor hospitality. On 17 April, UK seated diner reservations were at 60% of the level of the equivalent Saturday in 2019, while retail footfall increased by 31 percentage points in the week to 17 April, compared to the previous week. Other growing measures included credit and debit card purchases of delayable good and the proportion of those leaving the home who had shopped for items other than food or medicine. In contrast, there was a slight decrease in the proportion of the workforce on furlough.   

Further ONS data shows that 77% of businesses are currently trading, up from 71% in January, and 9% intend to restart in the next fortnight. The proportion of businesses with lower turnover than normally expected is at its lowest since records began in June 2020. However, over half of businesses classified as ‘other service activities’ (including hairdressing and beauty treatment) have three months’ cash reserves or less. 

 

Weekly Health Summary

Covid-19: Weekly Health Summary – 22 April

The Health Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Pandemic response

The Covid-19 vaccine rollout has continued with momentum this week. On Monday the Government confirmed that 1 in 5 adults have received both doses of the vaccine after more than 10 million people received their second dose. Announcing the news, Prime Minister Boris Johnson said: ‘Vaccines offer us the best possible protection from the virus, so it is fantastic that 10 million people have now received their second dose. This is another remarkable milestone in our vaccination programme, which has already saved thousands of lives.’ 

Antivirals Taskforce 

On Tuesday, the Government launched a Antivirals Taskforce to roll out innovative Covid-19 treatments this autumn. The taskforce will search for the most promising novel antiviral medicines that can be taken at home. It will support the development of the antivirals through clinical trials to ensure they can be rapidly rolled out to patients as early as autumn. It is aimed that the Taskforce will be a vital tool to combat any future increase in infections and limit the impact of new variants, especially over the flu season later this year.  

Sir Patrick Vallance, Government Chief Scientific Adviser, said: ‘Antivirals in tablet form are another key tool for the response. They could help protect those not protected by or ineligible for vaccines. They could also be another layer of defence in the face of new variants of concern. The taskforce will help ensure the most promising antivirals are available for deployment as quickly as possible.’ 

The Pharmacy Collect service 

90% of community pharmacies in England now offer free, rapid tests for home use. This follows the launch of the ‘Pharmacy Collect’ service, which provides an additional route to regular testing, making it as easy as possible for people without Covid-19 symptoms to access testing twice a week. It is hoped that testing will form a crucial part of the pandemic response as society reopens from lockdown.  

Pandemic Preparedness Partnership launched 

The Government launched a new Pandemic Preparedness Partnership (PPP) this week to protect against future diseases and prevent another global pandemic. The PPP will advise the UK G7 Presidency on how to meet the Prime Minister’s ambition to slash the time to develop and deploy high quality vaccines for new diseases from 300 to 100 days. The Partnership will also provide recommendations for therapeutics and diagnostics, looking at greater global co-operation on research and development, manufacturing, clinical trials, and data-sharing. 

£16m of funding to Coalition for Epidemic Preparedness Innovations (CEPI) will support global vaccine supply and development. CEPI’s work to coordinate research, development, and manufacturing of vaccines will aid efforts to have millions of doses of vaccine available for emergency use 100 days from a variant of concern being identified. 

Healthcare backlog in the NHS 

NHS Providers have laid out a ‘bold transformative approach’ to address the ‘concerning’ backlog in the health service following the pandemic. Their approach is based on 5 elements: increase physical and workforce capacity, build capacity, improve NHS efficiency and productivity gains, reconfigure hospitals to deal with future waves of COVID-19 and winter pressures and rapidly adopt new ways of treating patients. Chief Executive Chris Hopson said: ‘Early work by trust leaders shows there is a huge backlog to clear. Trust leaders are going as fast as they can in tackling the most urgent cancer, surgery, and other cases. They are only too aware of the impact of delays. The scale of the backlog ahead is very worrying.’ 

This comes as research published by the Royal College of Physicians last week showed that 59% of their members think it will take at least 18 months for the NHS to recover from the pandemic with 69% of doctors reporting feeling exhausted and 31% demoralised. 

In a Westminster Hall debate this week the Minister for Health Edward Argar said that the Government and NHS are working very hard to reduce the backlog in elective care, which now stands at 4.7million. The Government has laid out additional funding for the NHS, including £6.6 billion to support the recovery over the next 6 months. 

Weekly Economy Summary

COVID-19: Weekly Economy Summary – 15 April

The Economy Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

GDP 

UK gross domestic product (GDP) is estimated to have grown by 0.4% in February 2021, as Government restrictions affecting economic activity remained broadly unchanged. February’s GDP is 7.8% below the levels seen in February 2020, compared with 3.1% below the initial recovery peak in October 2020. Latest estimates show that January’s GDP fell by 2.2%, an upward revision from negative 2.9%.  

The latest National Institute of Economic and Social Research (NIESR) tracker suggests that GDP is likely to have fallen by around 1.5% in the first quarter of this year. Assuming that the vaccination and re-opening programmes continue to run to schedule, NIESR estimate growth to be 4.6% in Q2, driven by pent-up demand and a return towards pre-Covid levels in the hospitality and retail sectors. 

Their month-on-month forecast for March, when many children returned to school, is for growth of 1.8%. April is then forecast to see growth of 2.2%, driven by the partial re-opening of pubs and restaurants. 

Rory Macqueen, Principal Economist – Macroeconomic Modelling and Forecasting at NIESR, said: ‘Despite little change in restrictions, a return to growth in February and upward revisions to January GDP mean that the contraction in the first quarter will be much smaller than anticipated. Clearly much of the economy has adapted to cope with Covid-19 restrictions. If the vaccine programme and lifting of restrictions continue on schedule, this provides a firm basis for continuing growth in the second quarter and 2021 overall. The third wave in Europe and the success of other countries in vaccinating their populations will also have relevance for the recovery of the UK, as an open economy.’

Economic impact 

A new report from the Resolution Foundation think tank finds that young people have experienced a ‘sharp rise’ in unemployment during the pandemic, with the increase fastest among recent education leavers and young Black people.

The report attributes the rise to disproportionate employment in sectors such as hospitality and leisure which have been worst hit by the pandemic, adding that the unemployment rate for 18-24 year-olds rose 18% between April-June and July-September of last year. Those who recently left education face a 40% increase in unemployment, as the think tank warns of a double hit on 18-24 year-olds of both losing their jobs and being unable to find work in the first place. The Resolution Foundation calls on the Government to do more to protect young people from the impact of long-term unemployment by expanding and extending its Kickstart youth jobs scheme. 

Recovery 

On the day that non-essential shops and other businesses in England reopened for the first time since January, studies suggested that the bounceback in the economy could be broader and faster than previously expected. According to analysis by YouGov and the Centre for Economics and Business Research (CEBR), consumer confidence has risen to its highest level since August 2018.

The CEBR has predicted that savers will unlock more than a quarter of £192bn in lockdown rainy-day funds this year, adding £50bn to consumer spending. About £314m is expected to be spent in the newly reopened hospitality sector in this week alone, it said, while figures from the Post Office showed that Britons withdrew £590m in cash in March, the highest monthly figure since September. 

Deloitte’s survey of bosses at some of the UK’s biggest public companies found that the potential spending boom was helping to fuel record levels of optimism among chief financial officers in charge of companies’ purse strings. Respondents said they now expected a ‘strong recovery in profits over the next 12 months, with profit expectations back to the previous high seen in mid-2014 at the top of the economic cycle’. 

Among smaller firms, the Federation of Small Businesses (FSB) said it had found the greatest level of optimism among its members since 2014. Just over half (58%) of the 1,700 companies questioned expect their performance to improve this quarter, while 31% expect it to worsen. The FSB’s small business index has risen to +27.3 for the first quarter of 2021, a marked improvement on the -49.3 score at the end of last year. 

Former Bank of England Governor warns of post-pandemic inflation 

Mervyn King, who served as Governor of the Bank of England between 2003 and 2013, has warned of rising inflation as Covid-19 restrictions are eased. Speaking at the Royal Economic Society’s annual conference, Lord King said that central banks and finance ministries across the world are becoming overly dependent on stimulus as a means to support economic recovery from the coronavirus pandemic.

This analysis contrasts with views expressed by most members of the Bank’s Monetary Policy Committee, but it chimes with projections made by the Bank of England’s chief economist Andy Haldane, who has previously warned of cost of living pressures as lockdown measures are relaxed. 

King said he believed Governments should focus on providing targeted assistance for workers and businesses that have suffered most during the crisis using the tax and benefits system rather than stoking overall demand by pumping billions into fresh stimulus programmes. He suggested that heavily indebted firms should be allowed to collapse in order to boost growth and optimise Britain’s post-pandemic recovery, stating that there is ‘no argument for a dramatic set of expansionary policies’.

Weekly Health Summary

Covid-19: Weekly Health Summary – 15 April

The Health Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Vaccine programme target hit   

Vaccination efforts have continued this week as the Government hit its target to offer everybody in phase 1 of the vaccination programme a jab. More than 32 million people have been given their first dose of a COVID-19 vaccine with jabs offered to everyone aged 50 and over, health and care workers and the clinically vulnerable. This group accounts for 99% of all COVID-19 deaths during the pandemic, so it is hoped that the most vulnerable are now protected.

Celebrating the ‘remarkable achievement’ Health and Social Care Secretary Matt Hancock said: ‘I’m delighted that across the UK, we’ve met our target to offer a vaccine to everyone in the top nine priority groups, ahead of the deadline of 15 of April.’ 

Data from Public Health England’s real-world study shows that both the Pfizer and Oxford/AstraZeneca vaccines are highly effective in reducing COVID-19 among older people aged 70 years and over. It estimates that over 10,400 deaths have been averted as a result of the COVID-19 vaccination programme up to the end of March 2021. 

Phase 2 of the vaccine rollout  

Phase 2 of the Government’s vaccine rollout commenced this week, with people aged 45 to 49 invited to book their appointments. This comes as the Joint Committee on Vaccination and Immunisation (JVCI) advised that the continued vaccination rollout is based on age. It has also said that unvaccinated individuals who are at increased risk of severe outcomes from COVID-19 on account of their occupation, male sex, obesity or ethnic background are likely to be vaccinated most rapidly by an operationally simple vaccine strategy. The NHS Confederation has called this approach ‘reassuring’ and called for more operational guidance for primary care teams.  

It has also been confirmed that the Moderna vaccine, approved by the Medicines and Healthcare Products Regulatory Agency in January, will also be deployed in England across more than 20 vaccination sites. NHS medical director Professor Stephen Powis said: ‘The Moderna rollout marks another milestone in the vaccination programme. We now have a third jab in our armoury and NHS staff will be using it at more than 20 sites from this week, with more coming online as supplies expand.’ 

Chris Hopson, the Chief Executive of NHS Providers, has welcomed the successes of the vaccination programme but called for caution in the ongoing Covid-19 pandemic. He highlighted that the under 50s and the most vulnerable not yet vaccinated must receive their jabs. As society opens up this week, with non-essential shops, gyms, and beer gardens opened on Monday, he said: ‘We need to balance celebration with caution. The underlying reality of this horrible virus remains the same – as we increase social contact, the rates of transmission will go up as well.’ 

NHS England waiting lists  

Statistics from NHS England, published this morning, highlight the ongoing backlog in NHS services, particularly for routine hospital care with a waiting list now at 4.7 million people. The number of people waiting for a key diagnostic test at the end of February was 1,151,200.  

The Health Foundation responded to the statistics: ‘The Government and NHS leaders now need to be clear and realistic with the public about how they intend to get the NHS back to full strength. This includes dealing with the backlog of care, achieving the ambitions to modernise the NHS as set out in the long-term plan and anticipating the effects of long COVID and an expected rise in poor mental health. There will need to be significant investment at the next Spending Review if we are to see improvement on waiting lists and plugging staff shortages, which are holding back progress.’ 

NHS England has published a statement on the statistics where it highlighted that: ‘NHS staff completed almost two million operations and other elective care in January and February while also providing hospital treatment for almost 140,000 Covid patients. 

Weekly Health Summary

Covid-19: Weekly Health Summary – 8 April

The Health Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Oxford/AstraZeneca Vaccine
This week the Government announced that people under the age of 30 with no underlying health conditions will be offered an alternative vaccine to the Oxford/AstraZeneca drug where possible. This followed a statement by the Joint Committee on Vaccination and Immunisation which confirmed reports of an extremely rare blood clots following vaccination with the first dose of AstraZeneca.

Given the very low numbers of events reported overall, there is currently a high level of uncertainty in estimates of the incidence of this extremely rare adverse event by age group. However, the available data does suggest there may be a trend for increasing incidence of it with decreasing age, with a slightly higher incidence reported in the younger adult age groups. The decision is a precaution, and the Government has encouraged the public to continue to take up their offer of the vaccine.  

Professor Martin Marshall, Chair of the Royal College of GPs responded to the news: ‘Today’s announcement from the MHRA, and also the EMA, should be taken as reassurance for patients that overall, the benefits of taking the AstraZeneca vaccine for COVID-19 outweigh the risks… It’s vital that patients understand that the risk of developing blood clots after receiving the AZ vaccine is incredibly low for all patient groups.’ 

Roadmap out of lockdown 
The Prime Minister announced on Monday that the country would go ahead with the next stage of the Government’s roadmap out of lockdown. From Monday 12 April, non-essential shops will reopen along with personal care services and indoor gyms. Outdoor hospitality will also open up, including pub beer gardens.  

With this the Government confirmed that everyone in England, including those without symptoms, will be able to take a free rapid coronavirus (COVID-19) test twice a week. Alongside vaccine rollout, it is hoped that regular testing will help the reopening of society, helping to suppress and control the spread of variants. Updates to the NHS Covid-19 app will also be made to coincide with the new test offering.

Health and Social Care Secretary Matt Hancock said: ‘Around one in three people who have COVID-19 show no symptoms, and as we reopen society and resume parts of life we have all dearly missed, regular rapid testing is going to be fundamental in helping us quickly spot positive cases and squash any outbreaks.’ 

Danny Mortimer, chief executive of the NHS Confederation said that lockdown easing must be done cautiously ‘to ensure the NHS has capacity to tackle the huge backlog of treatment, deal with the growing demand for mental health services, and also allow its exhausted and overstretched staff the respite they so desperately need.’ He also welcomed the new commitment on testing but said that there must be resources in place for people to self-isolate if they receive a positive test.  

Covid-19 transmission 
An update to the REACT-1 study, one of the country’s largest studies into COVID-19 infections in England, has been published today. Findings show infections fell by approximately 60% from the last REACT study in February, with only one in 500 people infected. However, the prevalence of infections has now plateaued, showing it is critical everyone continues to follow the guidance and rules to help control the epidemic. 

The study also found that the correlation between prevalence of infections and deaths has diverged, suggesting that infections may have led to fewer deaths since the start of widespread vaccination through the Government’s vaccination programme. 

NHS Providers said: ‘We need to be alert to a possible rise in COVID-19 infections with lockdown restrictions being eased next week and the ongoing risk from variant strains which now pose the greatest threat to our efforts to control this pandemic. It is absolutely crucial that everyone continues to follow the guidance to prevent a rise in infections and further deaths.’ 

 

Weekly Economy Summary

COVID-19: Weekly Economy Summary – 8 April

The Economy Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Reopening economy
At a Downing Street briefing early this week, the Prime Minister said he plans to stick ‘like glue’ to his plans for easing current measures. He confirmed that step two – where shops, hairdressers and beer gardens can reopen – will go ahead on 12 April as planned. 

Analysis from Springboard indicated there was ‘pent up demand’ from consumers for bricks-and-mortar shops, with the firm predicting a 48% increase in sales after the next stage of lockdown easing on 12 April. On a similar note, data from Barclaycard showed that spending on leisure and entertainment increased by 136% last week. 

Business insights and impact on the UK economy
The percentage of businesses currently trading has increased gradually from 71% in early January 2021 to 75% in late March 2021. This is a similar level to that seen in July 2020, but lower than the 84% seen in mid-December 2020.  

The percentage of currently trading businesses experiencing a decrease in turnover, compared with normal expectations for this time of year, has fallen from 46% in January 2021 to 40% in mid-March 2021. 

Prior to August 2020, when the first lockdown restrictions in response to the coronavirus pandemic were in place, the percentage of currently trading businesses experiencing a decrease in turnover, compared with normal expectations for this time of year, was consistently above 50%, reaching 65% in early June 2020 (when comparable estimates began). When compared with the 40% of businesses experiencing a decrease in turnover in the most recent estimates, this suggests current lockdown restrictions do not seem to be having the same scale of impact, perhaps because of businesses adapting. 

The proportion of businesses’ workforce on furlough leave increased from 11% in early December 2020 to 19% in mid-March 2021. This level was last seen in late July 2020, when coronavirus restrictions were easing after the first national lockdown in the UK. The 19% of businesses’ workforce on furlough leave in mid-March 2021 equates to approximately six million people. 

Signs of a recovery in the jobs market have emerged with recruiters reporting that permanent hiring activity reached a six-year high in March. The latest labour survey by KPMG and the Recruitment and Employment Confederation recorded that month-on-month growth in permanent placements was the highest since April 2015. Demand for temporary staff rose at the fastest rate since November 2017.

Business support
A new Government-backed loan scheme launched this week to support firms through the gradual reopening of the economy from Covid-19 lockdown measures. The Recovery Loan Scheme follows on from the previous support offered by lenders via the Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS), and Coronavirus Large Business Interruption Scheme (CLBILS). Under the new scheme, businesses can apply for loans between £25,000 and £10 million which are 80% guaranteed by the Government. 

Recovery
Stronger recoveries from the Covid-19 pandemic in the US, the UK and other rich western countries will result in faster than expected growth for the global economy this year, the International Monetary Fund (IMF) has predicted. The IMF suggested that the UK will be the fastest growing advanced economy in 2022 as a result of the successful vaccination scheme and Treasury spending, with it likely to return to its pre-pandemic level of activity in late 2022. 

According to accountancy and business advisory firm BDO, the UK economy may see a significant boost to its recovery as close to 86% of UK mid-tier businesses told BDO they are looking to recruit more staff over the next six months, with over half (54%) planning permanent appointments. More than a third (36%) of business leaders said they would now hire apprentices as a direct result of the Government’s £3,000 apprenticeship grant announced in the Budget. This came as part of a larger 70% of businesses planning to recruit in this area regardless of the incentive.

Investment plans also received a boost in the March budget. Nearly half of businesses (47%) are planning new investments following the ‘super deduction’ initiative, which allows companies to cut their tax bill by up to 25p for every £1 they invest. According to the data from accountants at BDO, three-quarters of the UK’s medium-sized businesses state that 2021 is the time to invest, and 26% of them are already planning to invest in new locations or M&A.

Weekly Economy Summary

COVID-19: Weekly Economy Summary – 1 April

The Economy Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Economic outlook
UK gross domestic product (GDP) is estimated to have increased by 1.3% in Quarter 4 (Oct to Dec) 2020, revised from the first estimate of 1.0%. The level of GDP in the UK is now 7.3% below its Quarter 4 2019 level, revised from the previous estimate of 7.8%.

There have also been some revisions to earlier quarters in 2020. GDP in Quarter 2 (Apr to June) 2020 is now estimated to have fallen by 19.5%, while it is estimated to have increased by 16.9% in the third quarter. However, the annual picture is largely the same. Over the year as a whole, GDP contracted by 9.8% in 2020, slightly revised from the first estimate of a 9.9% decline.

This is the largest annual fall in UK GDP on record, while historical figures from the Bank of England point to this being the largest annual contraction since ‘The Great Frost’ of 1709.  

Separately, the UK economy was the worst performer among the G7 group of wealthy nations last year, in part reflecting that the public health restrictions imposed have been in place for longer, as well as having higher levels of stringency. 

The latest monthly GDP estimates for January 2021 show that there was a 2.9% contraction in the UK economy, as the third national lockdown weighed further on GDP. The latest Business Insights and Conditions Survey showed that 42% of trading businesses had experienced a fall in turnover in early March 2021, compared with normal expectations for this time of year. This is an improvement from earlier in the year, implying that there might be a slight rebound in output in March.

The Flash UK Purchasing Manager’s Index for March paints a similar picture, finding higher levels of business activity in March underpinned by the prospect of the lifting of restrictions. This included ‘forward bookings from domestic consumers, while some manufacturers cited advanced orders from hospitality businesses and high-street retailers’. 

Recent figures from the Bank of England (BoE) showed that in March, businesses estimated that their sales in 2021 Q1 would be 20% lower than they otherwise would have been because of Covid-19, with employment 9% lower and investment 21% lower.

Overall, uncertainty continued to fall in March. The percentage of businesses that viewed overall economic uncertainty as high or very high fell from 67% in January and 58% in February to 57% in March, the lowest level since February 2020.

The number of payrolled workers declined by 693,000 between February 2020 and February 2021, while there are 4.7m employees furloughed as of the end of February 2021 that are mostly concentrated in the accommodation and food service activities, and wholesale and retail trade industries.  

According to a new report from the Learning and Work Institute and The Prince’s Trust, supported by HSBC UK, youth unemployment will remain high after other areas of the economy begin to recover. The economic cost of youth unemployment, in terms of lost national output, is forecast to rise to £6.9bn in 2022. The fiscal cost of youth unemployment, in the form of lower tax revenue and higher benefit spending, is forecast to be £2.9 bn in 2022.

The long-running scarring cost to young people entering the labour market in 2021, in terms of lost earnings and damage to employment prospects, is forecast to be £14.4bn over the next seven years. 

Plan for Growth and second meeting of the Build Back Better Business Council
On Tuesday, Prime Minister Boris Johnson hosted  the second meeting of the Build Back Better Business Council, which was established in January as a high-level forum for engagement between businesses and the Government. There, they set out how to make 2021 the ‘year of economic recovery’.

Ahead of the meeting, Chancellor Rishi Sunak and Business Secretary Kwasi Kwarteng wrote an open letter to businesses on the Government’s Plan for Growth. 

The Plan for Growth looks ahead, building on the best of the Industrial Strategy set out in 2017 and refreshing the Government’s long-term strategy for growth in light of a new economic landscape, including the pandemic, the net zero target and the UK’s new place on the world stage as an independent nation outside the EU.

The Plan for Growth sets the path to invest in infrastructure, skills and innovation to ‘build back better’, while harnessing the strengths, resilience and creative spirit seen from businesses over the past year. This Government will focus on achieving three priority objectives: tackling geographic disparities, enabling the transition to net zero and supporting their vision for Global Britain. 

Tuesday’s Council meeting particularly looked at the innovation pillar of the Plan for Growth and discussed the Government’s upcoming Innovation Strategy, due to be published this Summer. 

Minimum wage rises
Around two million of the UK’s lowest-paid workers will get a pay rise from Thursday as the minimum wage goes up. The National Living Wage will rise 2.2% to £8.91, the equivalent of over £345 a year for a full-time employee. And for the first time since it came into effect in 2016, more younger people will be eligible for the National Living Wage, as the age threshold will be lowered from 25 to 23 years old. The rise means someone working full time on the National Living Wage from April 2021 will be taking home £5,400 more annually than they were in 2010.

The new rates – announced at the Chancellor’s Spending Review 2020 – were recommended by the independent body the Low Pay Commission, following extensive consultation. 

 

Weekly Health Summary

Covid-19: Weekly Health Summary – 1 April

The Health Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Roadmap 
This week saw the next phase of the Government’s Roadmap out of lockdown restrictions. As of Monday, the public is allowed to meet six people outdoors and do outdoor exercise. Speaking at the Downing Street Press Conference, the Prime Minister said that despite infections falling to the lowest number in six months, ‘we must proceed with caution’.  

Vaccination hesitancy and uptake  
While positive vaccine sentiment has increased to 94% in the latest period (17 to 21 March 2021), from 78% when the data were first collected (10 to 13 December 2020), there are higher levels of hesitancy among some groups, including young people (12%), Black or Black British (22%) and those living in the most deprived areas (12%).  

Research from the Office for National Statistics published this week on the Covid-19 vaccine highlights the uptake across the population. It showed the percentage of people vaccinated was lower among all ethnic minority groups compared with the White British population; the lowest vaccination rates were observed among people identifying as Black African and Black Caribbean (58.8% and 68.7% respectively). Those living in deprived areas were also less likely to have taken up their offer of a vaccine. While people who have a disability also had lower rates of vaccination at 86.6%, compared with those who were non-disabled at 91.0%.  

The NHS Confederation has argued that the results show there is ‘more work to do’. It has said that we need to ensure that the vaccine is equitable, and we need to overcome vaccine hesitancy, ‘as marginalisation clearly plays a major part in pushing uptake down.’ 

Poor mental health among emergency responders
Data from a survey of more than 250 staff and volunteers across police, fire and ambulance services in Wales has laid bare the scale of poor mental health within the emergency responder communities. The online survey found that mental health has worsened across 999 services, with ambulance staff worst affected.

Only one in three (33%) ambulance staff reported their current mental health as very good or good compared to two in five police (44%) and almost one in two (49%) survey respondents working within the fire service. Ambulance staff were the most likely (72 %) to say their mental health has worsened since the start of the coronavirus pandemic, compared to police (56%) or fire (61%). 

The highest proportion of respondents saying they had poor mental health were within the ambulance service, at almost one in three (30%). This compares to just under one in four (22%) respondents from the police service and just under one in ten (11%) within the fire service who rated their mental health as poor currently. 

Mental health support
Over the weekend, the Government announced a £500m Mental Health Recovery Action Plan to respond to the impact of the pandemic. The plan will support the expansion and improvement of mental health services, including NHS talking therapies and community services. The funding forms part of the Government’s plans to level up mental health and wellbeing across the country.

Announcing the plan, the Health and Social Care Secretary Matt Hancock said: ‘As part of our response to this global pandemic we not only want to tackle the public health threat of coronavirus but ensure our clinicians have the resources to deal with the impact on people’s mental health.’  

Responding to the Mental Health Recovery Action Plan, Paul Farmer, chief executive of Mind said: ‘As we continue to deal with the effects of the pandemic and the economic recession, the true scale of the nation’s mental health is only beginning to emerge. It could be many months or even years before we fully recognise the pandemic’s toll on our collective wellbeing. That’s why we welcome the UK Government’s recovery plan, which will need to see departments working more closely than ever to deliver on its promises given the multiple social challenges we face.’ 

Office for Health Promotion
The Government has announced more information on its reform to public health, following its decision to dissolve Public Health England last year. The new Office for Health Promotion, which will lead the country’s efforts to improve and level up the health of the nation, it set to be established in the Autumn.  

The Office’s remit will be to systematically tackle the top preventable risk factors causing death and ill health in the UK, by designing, implementing and tracking delivery policy across Government. It will focus on areas including, obesity and nutrition, mental health across all ages, physical activity, sexual health, alcohol and tobacco.

Announcing the plans, the Prime Minister said: ‘Covid-19 has demonstrated the importance of physical health in our ability to tackle such illnesses, and we must continue to help people to lead healthy lives so that we can all better prevent and fight illnesses.’   

The Health Foundation has welcomed the cross- departmental approach to address the wide determinants of health. However, it raised concern about funding the new Office and highlighted that this year’s public health grant allocations represented a 24% cut in real terms per capita – equivalent to £1bn – compared to 2015/16.

It said: ‘The pandemic makes it all more urgent that we prioritise keeping people healthy. The Government faces a crucial window of opportunity in which to create a public health system equipped to take on the major health issues facing the country including rising obesity, a mental health crisis and a growing gap between the health of the richest and poorest’.  

The King’s Fund welcomed clarity on public health reform, but argued: ‘today’s announcement does not add up to a compelling vision for creating a healthier society and needs to be swiftly followed by a clear plan for improving the health of the nation.’

6 May Elections: what to expect

Several elections are set to take place across Britain on 6 May. Voting will take place for the Scottish Parliament, Welsh Parliament, London and Metro Mayors, London Assembly, Local Authorities and Police Commissioners.

With Covid lockdown restrictions still in place, the campaigns for each of these elections are far from ordinary and some of the issues that will impact who voters choose to cast their ballots for will also be far from ordinary.

Vuelio has teamed up with the Local Government Information Unit (LGIU) to provide a weekly bulletin with the latest news and updates, ones to watch and campaign information from the elections taking place across the country.

You can sign up to receive the weekly bulletin, starting on Wednesday 7 April, here.

Local Elections
In England, the 2021 local elections slated include over 150 local authority elections in hundreds of wards and divisions for both the delayed elections of 2020 and the scheduled elections of 2021, as well as:

  • Directly elected Mayors and Metro Mayor from 2020 and 2021
  • Parish Councils
  • By-elections
  • Neighbourhood Plan referenda
  • 40 Police and crime commissioner posts

Every single eligible citizen in England is due to be an elector in 2021. All areas are holding Police and Crime commissioner elections, except for Greater Manchester and London where these powers rest with the directly elected mayor. In many areas, electors will be voting on four or more different ballots.

This isn’t just about the sheer volume of decision making. It’s about choosing the people who will be deciding on vital services, dealing with social care in crisis, and making the tough choices as councils are struggling through an unprecedented financial crisis after a decade of unprecedented financial cuts. Local government is fundamentally about where people live and voters will be choosing the people who will help lead us to sustainable economic recovery as we emerge from the Covid crisis.

Scottish Parliament
In Scotland, 129 MSPs will be elected with the SNP hoping to regain the majority they lost in 2016. However, things have not been smooth sailing for the SNP with questions relating to the integrity of senior members of the party in the handling of the Alex Salmond scandal, all the way up to first Minister of Scotland Nicola Sturgeon. Former leader of the SNP Alex Salmond has launched his new Alba Party and it will be interesting to see how much it can deliver on his ambition for a clear majority supporting Scottish independence.

Leader of the Scottish Conservatives Douglas Ross is putting efforts into creating a unionist alliance going into the election to combat the SNP and Alba, and Ross also seems willing to serve as both an MP and an MSP (providing he is elected). Anas Sarwar will have been the leader of the Scottish Labour Party for less than three months by the time the election comes around and has so far been unwilling to enter into any agreement with the Scottish Conservatives.

Ross, Sarwar and the Leader of the Scottish Liberal Democrats Willie Rennie all seem to be making a similar argument that now is the time for recovery from the coronavirus pandemic and the discussion of independence is a distraction.

Welsh Parliament
In Wales, 60 MSs will be elected and the initial campaign focus has been on judging how well the Welsh Government has handled the pandemic. First Minister of Wales and Leader of Welsh Labour Mark Drakeford has presented his plans as ‘honest and realistic’, as he has said Wales is not likely to return to normality in 2021.

The Welsh Conservatives are taking a different view and are campaigning to end social distancing restrictions earlier than suggested by Drakeford. The Welsh Conservatives will be hoping for similar success as in the 2019 General Election, where the Conservatives gained six seats in Wales at the expense of Labour.

The decision to build or not to build the M4 relief road will also play a part as a key campaigning issue, with the Welsh Conservatives pledging to build the road if they win in the election. Drakeford has previously said the plans cannot go ahead because of the cost and the impact on the environment.

London Mayor
In London, Sadiq Khan faces no shortage of opponents, the following candidates will be attempting to take his spot: Shaun Bailey (Conservative), Siân Berry (Green), Luisa Porritt (Liberal Democrats), Kam Balayev (Renew Party), Valerie Brown (Burning Pink), Peter Gammons (UKIP), David Kurten (Heritage Party), Mandu Reid (Women’s Equality Party) and Laurence Fox (Reclaim Party). Independent candidates include Brian Rose, Nims Obunge, Charlie Mullins, Winston McKenzie, Farah London, Max Fosh, Drillminister, Piers Corbyn and Count Binface.

Baily, Berry and Porritt are likely to present Khan with his sternest opposition. Porritt is campaigning on a platform of taking London forward with ideas such as converting office space into affordable homes and improving air quality in London.

Berry has run to be London Mayor twice, in 2008 when she got 3.2% of the vote and 2016 when she got 5.8% of the vote and came third. The Green’s are focusing on fairness and tackling inequality and are presenting themselves as an independent voice in politics that can often be dominated by the Conservatives and Labour. The Green’s may also seek to capitalise on those who have drifted away from Labour since Corbyn stopped being leader.

Despite numerous criticisms to the approach so far, Bailey seems set on basing the campaign on how Sadiq Khan has failed as Mayor and how he can give London the fresh start it needs. Interestingly, it seems as though both Khan and Bailey are blaming each other for crime in London; Bailey blaming Khan as he is the Mayor and Khan blaming Bailey as he was a special adviser on crime during David Cameron’s time as Prime Minister.

Keep up with all the latest election news from Vuelio and the LGIU.

Weekly Economy Summary

COVID-19: Weekly Economy Summary – 25 March

The Economy Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

The UK’s debt has reached a new high as Government borrowing hit £19.1bn last month as it continues to battle the coronavirus pandemic and the economic fallout of lockdown. The Office for National Statistics (ONS) said the public sector had borrowed more last month than during any other February since records began in 1993.

The debt owed by public bodies has increased by £333bn since the start of April, the first month of full lockdown in the UK. It brings the total debt to £2,131.3bn or around 97.5% of GDP, the ONS said.

Central Government bodies are believed to have spent around £72.6bn running their day-to-day activities in February, a rise of £14.2bn compared with February 2020. This came as the Bank of England’s (BOE) Monetary Policy Committee voted unanimously to maintain the Bank Rate at 0.1%.

The BOE expects inflation to return quickly to its 2% target but has played down concerns about rising borrowing costs and fears of rapid inflation. The strong vaccine rollout, coupled with a lower fall to GDP in January than expected, have led to cautious optimism from the BOE regarding the overall economic outlook.

The BOE has also indicated it will likely revise its forecast for unemployment down to match the 6.5% peak figure forecast by the Office for Budget Responsibility.

The UK unemployment rate, in the three months to January 2021, was estimated at 5.0%, 1.1% higher than a year earlier and 0.1% higher than the previous quarter. However, the bigger picture is one of stability in the last few months, after the labour market deteriorated through the autumn.

The furlough scheme has stopped the effects of lockdown feeding into falling employment in the latest months. In fact, the number of payrolled employees has now increased for three months in a row, although since February 2020, the number of payroll employees has fallen by 693,000.

While the headlines are encouraging, data again underlines the impact of the crisis on young workers. Payrolled employment in February was down 11% on pre-crisis among under 25s, compared to being down 1% among other age groups.

The Centre for Economic and Business Research released analysis of the cost of coronavirus to the UK economy. The report suggests that COVID-19 has been the predominant cause behind a £251bn reduction in the UK’s gross value added over the past year, a fall roughly equivalent in size to the entire annual output of the South East of England in pre-pandemic circumstances and nearly twice the output of Scotland.

Business confidence has returned to its highest level since 2018, with 65% of firms confident about their growth prospects over the next three years, according to the Santander Trade Barometer.

Weekly Health Summary

Covid-19: Weekly Health Summary – 25 March

The Health Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Anniversary of the first Covid-19 lockdown
In the week that marks a year since the first lockdown was announced in the UK, the Prime Minister spoke of the ‘epic endurance’ of the British people. Speaking at the Downing Street Press Conference he said: ‘For month after month our collective fight against Coronavirus was like fighting in the dark against a callous and invisible enemy, until science helped us to turn the lights on and to gain the upper hand’.

The Prime Minister gave his thanks for the efforts behind the vaccine roll-out as well as the ongoing effort of public sector workers including in the NHS, social care, education and the police.  

The Government is yet to confirm its plans to hold a public inquiry to the handling of the coronavirus pandemic, despite calls from the Opposition. During Prime Minister’s Questions this week, Opposition Leader Kier Starmer spoke of the ‘shocking’ numbers of people who have lost their lives to Covid-19. He said: ‘As soon as restrictions lift, there must be a full public inquiry, because that is the only way we can get to the bottom of the many mistakes that were made during the pandemic and find justice for those who have suffered so much.’

The Prime Minister said that there will be an inquiry into the lessons learned as soon as it is right to do so, when it won’t diverge the attention of the key officials involved.  

UK Health Security Agency
The Health Secretary Matt Hancock has announced that a new agency, UK Health Security Agency (UKHSA), will be established in April 2021 to lead protection against future health threats. The UKHSA, which is to replace the short-lived National Institute for Health Protection, will become the UK leader for health security, providing intellectual, scientific and operational leadership at national and local level, as well as on the global stage.

The body is ran by Deputy Chief Medical Office, Dr Jenny Harries and will bring together the key elements of Public Health England with the Joint Biosecurity Centre (JBC), and NHS Test and Trace. UKHSA will initially focus on the continued fight against the COVID-19 pandemic.  

Responding to the announced, NHS Providers said: ‘We welcome further clarity from the Government on the new public health infrastructure. The pandemic has highlighted why it is so important to have long-term investment in public health services in recognition of the vital role they play in supporting overall health and wellbeing and building resilience in health protection’.

The new agency has also been welcomed by Cllr Ian Hudspeth, Chairman of the Local Government Association’s Community Wellbeing Board, who said: ‘The UKHSA needs to be able to operate nationally as a global player to major health threats. This needs to be aligned with councils’ ability to react swiftly on the ground, using their local knowledge, expertise and skills.’ 

There have also been wider calls for clarity on the other areas of public health, surrounding the broader determinants of health, including from the Health Foundation who said: ‘While the focus now is on organising to make sure the country can respond better to a future pandemic, much more important in the long run is making sure that Public Health England’s existing function to improve the health of the population is strengthened, and commands more political focus and investment.’

Speaking at the Local Government Association Annual Public Health Conference 2021, Hancock suggested he would lay out wider public health reform plans in the coming days. 

The Coronavirus Act 
The Coronavirus Act will have its annual debate in Parliament today. Members are expected to keep the Act in place, but the Government has suggested the removal of some of the Act’s components. Most notably as part of the it’s one-year report, the Government has concluded that it will seek to end the controversial ‘Care Act Easements’ which relaxed the duties for local authorities to provide care.

In England, only eight local authorities (LAs) have used these powers, but not since 29 June 2020. The Government said that over the past year, support groups and the social care workforce have remained resilient under significant pressure, and continued to deliver their duties without the need to operate under easements.  

Adult social care
A report published by The National Audit Office today on adult social care has concluded that innovation and investment in the sector have been hampered by short-term funding and the lack of a long-term vision.

It said: ‘COVID-19 has focused attention on social care as never before. It has highlighted existing problems with social care and emphasised significant gaps in the Department’s understanding of the market’.

Responding to the report, Danny Mortimer, chief executive of the NHS Confederation, said that the ‘pandemic has shone a harsh light on how fragile and severely under-resourced the country’s social care system has become after failures by successive Governments of all parties to act.’

He has called for the Government to rapidly deliver on its manifesto pledge to transform the sector. The Nuffield Trust said that the report has exposed the fundamental flaws and fragility of the social care provider market: ‘Organisations providing adult social care were struggling long before the pandemic took hold, with years of delay to any meaningful reform of the sector storing up the problems exacerbated by the pressure of Covid-19.’

Auditor image as the industry experiences a shake up

Audit sector reforms: Government publishes white paper

Today sees the release of a wide-ranging package of reforms for the audit sector by the Government, in the form of a white paper called ‘Restoring trust in audit and corporate governance’.

Launching the document, Business, Energy and Industrial Strategy Secretary Kwasi Kwarteng said: ‘It’s clear from large-scale collapses like Thomas Cook, Carillion and BHS that Britain’s audit regime needs to be modernised with a package of sensible, proportionate reforms’ and ‘restoring trust in our corporate governance regime and encouraging greater transparency’ would ‘provide investors with clarity and certainty, cement the UK’s position as the best place in the world to do business, and protect jobs across the country’.

How did we get here?
The audit industry has come under increasing scrutiny over the last few years, with cases such as those mentioned by Kwarteng drawing public and political attention to the sector’s practices and its regulation.

The joint report on the Carillion collapse by the Commons Business, Energy & Industrial Strategy and Work & Pensions Committees criticised the ‘Big Four’ audit firms. It noted that KPMG was ‘complacently signing off the directors’ increasingly fantastical figures’, Deloitte was ‘either unable to identify effectively to the board the risks associated with their business practices, unwilling to do so, or too readily ignored them’, EY provided ‘six months of failed turnaround advice’ and PwC had ‘benefited regardless of the fate of the company’, having advised Carillion and the Government prior to the collapse and served as its special managers subsequently. The Committees concluded that they had ‘no confidence’ in the sector’s regulator, the Financial Reporting Council.

These concerns have led to three reviews of the industry, whose findings today’s white paper reacts to:

  • In December 2018, Sir John Kingman’s Independent Review of the Financial Reporting Council It described the FRC as ‘an institution constructed in a different era – a rather ramshackle house, cobbled together with all sorts of extensions over time’ and called for it to be replaced by a new Audit, Reporting and Governance Authority.
  • In April 2019 the final report of the Competition and Markets Authority’s statutory audit market study proposed legislative change to improve competition in the sector in December 2018, including separating audit from consulting services and introducing a ‘joint audit’ system under which audits of FTSE350 companies would have to be conducted by two firms, one of which would be outside the Big Four.
  • In December 2019, the final report of Sir Donald’s Brydon’s Independent Review into the Quality and Effectiveness of Audit was published. Brydon called for ‘a fundamental shift in definition and approach’ and a ‘change in mindset’, noting that while ‘audit is not broken’, it ‘has lost its way and all actors in the audit process bear some measure of responsibility’. He stated that the central objective of his review was ‘making audit more informative to its users’.

What is proposed?

The 232-page document contains a wide range of detailed proposals, which stakeholders will be grappling with in the weeks to come. Key proposals include action to tackle the dominance of the ‘Big Four’ firms in the market. Large companies will be required to use a ‘challenger’ firm to conduct a meaningful portion of their annual audit and, if competition doesn’t improve, there could be a cap on the Big Four’s market share of FTSE350 audits.

There will be a new regulator, the Audit, Reporting and Governance Authority (ARGA), replacing the Financial Reporting Council, with the power to impose an operational split between accountancy firms’ audit and non-audit functions to reduce the risk of conflicts of interest. It will be backed by legislation, funded by a mandatory levy and would have stronger powers to enforce standards. Audit and assurance professionals will be encouraged to work towards a new audit profession, rather than being a subset of the accountant profession. The definition of ‘Public Interest Entity’ will be widened to include very large non-listed companies, which will need to meet more stringent requirements.

Auditors and directors are to be given new reporting obligations on detecting and preventing fraud, and audit will be extended beyond companies’ financial reports to consider wider performance, such as on climate targets.

There are also a range of proposals to increase the accountability of directors of large companies, including fines and suspensions for the most serious failings and measures to reclaim directors’ bonuses in the event of these failings or company collapses. Large companies will also be required to be more transparent about their finances, not paying out dividends or bonuses when they could be facing insolvency, and being required to publish annual ‘resilience statements’ setting out how they are mitigating short and long term risks, such as climate change.

What has the reaction been?

Given the scale of the Government’s proposals, it’s clear that a lot of bodies in the sector will be taking their time to arrive at a detailed assessment of their implications. Nevertheless, they seem to have been broadly welcomed. Maggie McGhee, executive director of ACCA, said that the Government’s proposals contain ‘a lot to consider’ but her organisation’s initial response was ‘to welcome the depth and breadth of what is being proposed’. Michael Izza, ICAEW Chief Executive, said that ‘modernising corporate governance is a vital part of sustaining public confidence’ and urged the Government ‘to get on with implementation as quickly as possible’.

Deloitte has urged a wide range of bodies to give their input into the consultation, with UK managing partner Stephen Griggs noting that ‘only widespread input from across the business community will ensure audit and the whole corporate governance regime evolves to better meet society’s expectations’, and claiming the white paper ‘provides a significant opportunity to enhance the reputation of the UK as a leading capital market and strengthen its position in the global economy’.

This position was echoed by PwC, whose Chairman and Senior Partner Kevin Ellis said reform could make ‘the UK an even more attractive destination for foreign investment’ and ‘the views of a wide range of businesses, investors and other interested parties will be key’. KMPG agreed that the reforms would ‘demonstrate we are a fantastic country to invest in’ and welcomed the introduction of ‘a resilience statement, including Environmental, Social and Governance disclosures’.

Labour’s Shadow Business, Energy and Industrial Strategy Secretary Ed Miliband said there were ‘real questions’ about the sufficiency of the measures. He said he welcomed proposals such as ‘tougher penalties for individual company directors where there are serious failings’ but regretted that some independent reform proposals had been watered down, including ‘mandatory joint audits between the big four and challenger firms’. He called for ‘a structural split between the audit and non-audit parts of business practises’ to remain an option.

What happens next?

The consultation on the proposals in the white paper is open until 8 July 2021. The Government says that responses to this will inform draft legislation to be laid before Parliament when time allows, while many measures not requiring legislation are being taken forward by the Financial Reporting Council. It notes that auditors and others have the scope ‘to take action on their own initiative’ in the meantime, such as on ‘defining and developing a new audit profession’.

Kwarteng claims that an ‘appropriate timetable’ will be followed to implement the plans given ‘the serious challenges that businesses are facing because of the pandemic’. The Government says its overall approach will be to quickly bring into effect measures that don’t ‘directly impact on businesses’ and to quickly commence ‘measures with significant impacts on those regulated by the new regulator’ (perhaps with phase in or transition periods), but to consider ‘measures with significant impacts on wider business’ for later commencement, a transition period or phasing in.

 

 

Weekly Health Summary

Covid-19: Weekly Health Summary – 18 March

The Health Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Vaccine roll-out
The Government has confirmed that more than 25 million people in the UK have received their first dose of a COVID-19 vaccine. This includes 95% of people aged 65 and over, and nine in 10 of those clinically extremely vulnerable.

The announcement comes as a letter from NHS England has said that health services should stop booking under-50s for their first-dose appointments for the whole of April. The letter explained that the move was necessary because of a ‘significant reduction in weekly supply’.  

However, speaking at the Downing Street Press Conference on Wednesday, the Health Secretary Matt Hancock praised the vaccination roll-out and confirmed that the Government is on track to offer the first dose of the vaccine to all over-50s by 15 April, as well as all adults by the end of July.

He confirmed that from Wednesday all people over 50 are invited to come forward and get their first Covid-19 jab. He also highlighted the importance of the vaccine rollout and showed data which demonstrates that after a first dose, protection against hospitalisation is around 80% and protection against death is around 85%.  

Professor Martin Marshall, Chair of the Royal College of General Practitioners, has responded to the news of potential vaccine supply issues, he said: ‘This disruption to supply is disappointing and will understandably be frustrating for patients, as it will be to GP teams running vaccination sites who want to protect as many people as quickly as possible – but we continue to receive assurances that this delay is temporary, and the vaccination programme remains on target.’ 

Digitalisation of the health services 
The Health Foundation published research this week on the positives of the use of healthcare technology during the pandemic. It found that around three fifths of NHS users increased their use of technology to access care during the first phase of the Covid-19 pandemic and an overwhelming majority of these (83%) viewed their experience positively. However, when compared to traditional models of care, NHS users are not so favourable to the use of technology in health services. Notably, NHS users 55 and older reported slightly higher proportions of negative experiences with the digitalisation of the health services.  

The Health Foundation recommends that there should be more research on the use of the technology in the NHS to ensure quality in long-term digitalisation of services, and so that changes are user centred. They also call for a refresh of the NHS Long Term Plan to optimise the use of recent technological innovations to meet longer term quality and productivity goals.  

Today the Health Secretary confirmed more NHS hospital trusts would benefit from the Digital Aspirants programme. 32 more trusts will now join those already participating in the programme. Seven will get up to £6m each over the next three years. The rest will get £250k seed funding to help them develop business cases for further digital investment. 

Impact of Covid-19 on health services
A report published by the Institute for Public Policy Research this week claims that the ambitions of the NHS Long Term Plan risk being severely disrupted by the coronavirus pandemic without a significant funding boost. It has suggested a £12bn blueprint to ‘build back better’, and made recommendations including creating a sustainable workforce, greater funding for the NHS, upgrading digital care and reforming social care making it free at the point of use.  

Marking a year since the first Covid-19 lockdown was announced
The Office for National Statistics (ONS) published a report on the impact of the pandemic a year on from when the first lockdown was announced. Since March 2020 more than 140,000 people have now died with Covid-19 in the UK. The number of adults in critical care in hospitals was far higher than previous winters. In the last week of January 2021, more than 5,000 adult critical care beds a day were occupied in hospitals in England, compared with around 3,000 a day in the same week in 2020.

The report also highlighted the wider impacts of the pandemic, including on the labour market, unemployment, the economy, and crime.   

NHS Providers said that the report lays bare the terrible toll of Covid-19 and the ‘immense pressure’ on the NHS over the past year. 

Weekly Economy Summary

COVID-19: Weekly Economy Summary – 18 March

The Economy Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Office for National Statistics (ONS) data for January suggests that the economy was hit less by the renewed lockdown than expected. UK GDP is estimated to have fallen by 2.9% in January 2021 compared to the predicted 5%. The output approach to GDP shows that January’s level was 9% below that seen in February 2020 and was 4% below levels seen in October 2020 – the initial recovery peak. 

The National Institute of Economic and Social Research (NIESR) said that January’s smaller than expected fall in GDP means that it now estimates a contraction of 2.4% in the first quarter of 2021. This would leave GDP in the first quarter of 2021 around 9% lower than its level in the last quarter of 2019, before the pandemic struck. 

Real-time data and NIESR analysis imply that GDP is likely to resume its growth in February and March, by 0.3% and 1.1% respectively, on the back of higher contribution from Government services and improving consumer confidence as infection rates come down. As a result, the first quarter of 2021 is likely to see a smaller contraction than widely anticipated. However, the pace of recovery from the second quarter will crucially depend on how the opposing effects of the vaccine roll-out and lifting lockdown affect the path of Covid-19, as well as how consumers and businesses react. 

Bank of England governor Andrew Bailey said that the UK economy should recover to its pre-pandemic size by the end of this year. Speaking in an interview with BBC Radio 4’s Today Programme on Monday morning, Mr Bailey said the Bank was ‘not out of firepower’ in defending the economy as it recovers from the pandemic, adding that it was looking at ‘new tools’ which could include negative interest rates. However, he warned that new variants of the virus could still pose a risk to the economic recovery. The Bank of England governor also remarked that the economic effects of the pandemic had been ‘very unequal’, with women, ethnic minorities and the low-paid all disproportionately impacted.  

OBR committee member and former Bank of England deputy governor Sir Charlie Bean said last week to the Commons Treasury Committee that he does ‘not expect households to go out and blow [their savings] all within the next quarter or two’ but it will be ‘spread out over several years’. According to a recent report by the Centre for Economics and Business Research, UK households will go on an estimated £50bn spending spree once lockdown restrictions are lifted. It warned that ‘if interest rates are kept low, there is a real threat that inflation could rise rapidly above the Bank of England’s 2% target and be difficult to control.’