Easing Covid limits early ‘could inflate deaths and deepen recession’


The lifting of coronavirus restrictions by the government could risk pitting the economy against public health, triggering a higher death toll and double-dip recession, two of the country’s top economists have warned.

In a warning to ministers, Nicholas Stern, the leading climate economist and former Treasury mandarin, and Sir Tim Besley, a former rate-setter at the Bank of England, said an abrupt and premature easing of lockdown would be counterproductive in the fight to save jobs and reboot Britain’s economy from the coronavirus recession.

Making the intervention as part of a taskforce of top economists and health experts convened by the Royal Society in response to Covid-19, they called on the government to pursue a cautious and prolonged reopening strategy to save both lives and livelihoods.

Besley said: “Pitting health and economic outcomes against each other is unhelpful. It is wrong to assume that the only way to get the economy back on its feet is through an excessive loosening of restrictions. Targeted policies that are sensitive both to the spread of the disease and economic costs are needed.”

The group said targeted government support for businesses and workers would be needed as the economy restructured to accommodate physical distancing requirements, smoothing the transition to a “new normal” in which coronavirus remains a risk without a lasting vaccine.

Among the measures required to safeguard Britain against the economic and health risks of coronavirus are:

  • Workplace rotation schemes to limit physical interaction and the spread of the disease.

  • Subsidies for workplace testing to control outbreaks, particularly in key industries as well as sectors with more human contact.

  • Boosting sick pay to remove a disincentive for self-isolation.

  • Drawing up a recovery plan that capitalises on net-zero carbon commitments, boosting job creation in green industries.

“The Covid-19 crisis has been an urgent wake-up call,” said Lord Stern. “Preparations for future recurrence of the epidemic – and for future possible coronaviruses – will be repaid by helping to mitigate the impact on schools, the NHS, public transport and supply chains, and the economy as a whole. We must recognise and act on the fragilities of the old systems.”

The report comes after official figures on Wednesday showed that Britain’s economy had entered the deepest recession since modern records began in 1955, due to lockdown measures causing a dramatic decline in economic and social activity.

With ministers easing lockdown measures to get the country moving again, the academics said the lingering health risks and uncertainty about the future would probably prove major drivers of reduced consumer spending and business investment in the future.

The report warned that consumer confidence would only return when people’s perceptions of public safety improved, which meant the use of targeted restrictions and financial support would be vital.

In assessing the types of policies that could be used to boost economic activity while limiting the spread of the disease, the report criticised the government’s “eat out to help out” restaurant discount scheme, saying it was “problematic” due to the risk of spreading coronavirus.

It said encouraging staff rotations within a workplace could reduce secondary infections of the virus to an eighth of the size of an outbreak where no such policies were in place. To encourage such policies, it said, government incentives could be used, including state subsidies for short-time working.

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