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Have government policies helped small firms cope with coronavirus?

Small firms around the world have been hit hard by the Covid-19 crisis. While governments have mobilised substantial resources in support, many measures have had limited effect, in part due to smaller enterprises struggling to access information on relief loans.

Prices & interest rates

What will be the impact of changes in the US monetary policy framework?

In August, America’s central bank, the Federal Reserve, announced two important shifts in its monetary policy strategy. The extent to which these changes will affect the economic recovery depends on the expectations of households and firms about future inflation.

Public spending, taxes & debt

How should governments source public services during a crisis?

To deliver its policy objectives, the government often has to decide on the extent to which it should outsource provision of public services to the private sector. Although outsourcing can help cut costs, evidence from the pandemic suggests that it may not always be the optimal strategy.

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Regaining balance

As restrictions ease and many businesses across the UK welcome customers back through their doors, there is hope that the economic recovery is beginning. But jobs and our communities may take longer to bounce back.

Recession & recovery

How has coronavirus affected social capital in the UK?

Social capital – a measure of the strength of our communities and society as a whole – has been declining in the UK in recent years. Rebuilding these bonds will be vital to meet the challenges of inequality, climate change and recovery from the crisis.

Data stories

A year in the UK labour market: what’s happened over the coronavirus pandemic?

Past recessions saw steep rises in unemployment or wage cuts. Tracking the performance of the UK labour market during Covid-19 shows that the most notable effects of a downturn caused by restrictions on mobility are the more dynamic aspects: falls in hours, hiring, job quits and house moves.

News

Economic evolution: fast and slow

Economics is evolving, with researchers developing new ideas and tools for the modern world. Economies themselves are harder to shift, as a piece on pay in Britain shows. At the Observatory we are changing too, with lots of new projects and events to tell you about in this week’s letter.

Prices & interest rates

How are economic models adapting to rising inequality and the pandemic?

Over the past 15 years economic models have evolved to place the differences between individuals at their heart. This new breed of model is helping us understand the implications of rising inequality, the pandemic and the recovery.

Jobs, work, pay & benefits

How might Uber drivers’ new status as workers affect the gig economy?

The Supreme Court has ruled that the tens of thousands of Uber drivers in the UK should be treated as workers rather than as being self-employed. The decision may force the company and other platform-based services to make big changes in how they operate.

Jobs, work, pay & benefits

Ethnic minorities and the UK labour market: are things getting better?

Comparison of disparities in pay, employment and unemployment among different ethnic groups in the UK shows that there has been little change over the past 25 years. Indeed, for black, Pakistani and Bangladeshi men and women, pay gaps with white men and women have widened.

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Jabs and jobs

Over a year into the Covid-19 crisis, many of the questions that the Economics Observatory was set up to answer remain critical. Protecting public health and promoting economic health are deeply interconnected – and policy should aim for as much as possible of both.

Business, big & small

Should companies be allowed to buy back their own shares?

During the pandemic, there has been severe hostility to firms buying back their own shares, a practice only made legal in the UK in 1981. Opposition to stock repurchases is associated with allegations of ‘short-termism’, but there is little evidence to support such claims.

Nations, regions & cities

Update: What has been the impact of Covid-19 on Northern Ireland’s economy?

Given the resurgence of the virus and a bigger fall in Northern Ireland’s GDP than expected, policy is focused on restoring public health and maintaining some stability of jobs and incomes. But delays in tackling underlying economic weaknesses will have long-term costs.

Data stories

Data update: Labour market

What does the latest data release reveal about the state of the UK labour market? While the job market has been fairly stable in recent months, growth in wages saw a big dip. People are also working less, with the number of hours worked down compared with last year.

Crime & policing

How are crime trends in England and Wales changing during the pandemic?

In the first lockdown, crime was lower except for anti-social behaviour and drug offences. As economic effects of the pandemic change the incentives to break the law, deprived areas have seen a rise in acquisitive crimes, such as burglary, shoplifting and bicycle theft.

New Post • Health, physical & mental

Who should be vaccinated first?

Limited supplies of Covid-19 vaccines mean that hard choices need to be made. There have been a variety of different national strategies for deciding who should be priorities for the first doses. Each method of allocation raises health, economic and ethical issues.

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Trading blows

The growing queue of ships sitting idle in the Suez Canal illustrates the vulnerability of the interconnected global economy to trade disruptions. Tensions between the UK and the EU over vaccine exports are a reminder that cooperation is vital, especially in a crisis.

News

A year in lockdown

Tuesday next week marks a year since the UK’s first national lockdown began. The end of our third period of compulsory confinement is on the horizon, but the damage that Covid-19 has caused to our health, wealth and wellbeing is likely to be long lasting.

Trade & supply chains

How is the Brexit trade agreement affecting the Welsh economy?

The new trading arrangements between the UK and the European Union have led to big disruptions for many businesses in Wales, particularly those in sectors that previously depended on seamless border processes, such as agriculture, automotive and aerospace.

Inequality & poverty

What are the implications of Covid-19 for wealth inequality?

A year ago, the FTSE 100 stock market index hit its lowest point in almost a decade, diminishing the value of assets held mostly by the wealthy. Twelve months on, it is likely that wealth inequality has gone back to where it was or grown wider than before the crisis.

Data stories

What do new UK trade data reveal about the impact of lockdown and Brexit?

Lockdown probably contributed to the fall in UK exports and imports reported in the January 2021 trade data. But the bigger declines in trade with the European Union than with other countries are likely to reflect the impact of higher trade barriers due to Brexit.

Health, physical & mental

How have school closures affected children’s mental health?

Children in year groups that were not priorities to return to school before the 2020 summer holidays experienced greater average declines in their mental health. As schools re-open, it is vital to balance efforts to make up for learning losses with the need to improve wellbeing.

Jobs, work, pay & benefits

Update: How is coronavirus affecting the self-employed?

A year into the Covid-19 crisis, it is widely recognised that the UK’s self-employed workers have been among the hardest hit. Survey evidence shows that the latest lockdown is once again leaving the self-employed with lower incomes and substantially reduced hours.

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Women and the pandemic

Even before coronavirus, women faced many inequalities, including in their pay and employment, their mental health and the division of household labour. On many measures, these have only worsened over the past year, leading to calls for a women’s strategy to mitigate the damage.

Jobs, work, pay & benefits

What is the future of working from home?

Working from home has become more common during the pandemic, but only in certain sectors. The likelihood that the practice will be permanently adopted depends on perceptions of workforce productivity.

Business, big & small

How is Covid-19 affecting entrepreneurs and small firms in Northern Ireland?

Small firms make up more than 95% of businesses in Northern Ireland. Their smaller size and resource-base has made them particularly vulnerable to the damaging economic effects of the pandemic.

Families & households

Update: How is the response to coronavirus affecting gender equality?

A year on from the first lockdown, many people’s jobs have been affected, either through redundancy, furlough or reduced hours. Both men and women’s employment has suffered, but mothers have been hit harder than fathers or those without children, widening inequalities.

Pensions, savings & investment

Does the stock market reflect the economy?

Stock market fluctuations often seem far removed from what’s happening in the wider economy, especially in a crisis. But historically, share prices have been able to explain some changes in key economic measures and they could hold clues for the UK’s post-pandemic recovery.

Health, physical & mental

Why should we care about obesity?

Obesity is increasing in the UK and around the world, including among children from disadvantaged backgrounds. As well as immediate health effects, obesity can have an impact on young people’s learning and future prospects.

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Reality check

While more lockdown restrictions will be eased in England on Monday, Covid-19 continues to affect the lives and livelihoods of people all over the world. Ensuring a successful vaccine rollout remains critical for economic recovery, both at home and abroad.

New Post • Science, technology & innovation

Should patents on Covid-19 vaccines be waived?

There is much debate about whether the patents on Covid-19 vaccines should be waived to allow low-income countries to produce doses for themselves. In current circumstances, such a course of action is likely to have little effect for good or ill.

Health, physical & mental

How does the market for vaccines work?

Effective vaccines are developed through collaboration between governments, publicly funded research universities and for-profit pharmaceutical companies. But the incentives to produce the doses can often leave out lower-income countries.

Business, big & small

Update: Are small businesses ready to compete as consumers move online?

The shift to online shopping during the pandemic is a big challenge for small firms and ‘micro enterprises’, large numbers of which are not used to e-commerce. Many lack a website, let alone the option for customers to make online purchases.

Transport & infrastructure

What is the future of commuting to work?

Around half the UK labour force is currently working from home. Surveys of employees conducted in March and April 2021 suggest that spending two to three days a week at home is the most common expected working pattern after the pandemic.

Schools, universities & training

Generation Covid: how is the pandemic affecting the young?

The past year has been one of the most volatile periods of education policy in history. It is proving costly for every age group of young people: from pre-school through to further and higher education, and those starting out in their careers.

News

Arms race

Even as the UK’s vaccine rollout continues to gather momentum, the moral and economic arguments for ensuring global immunisation mount. At home, promoting an even recovery across regions and sectors remains paramount.

Data stories

Covid-19: in numbers

The story of a unique year, told through data. The charts here run direct from official sources

Lessons from history

How has the UK labour market fared in recessions and recoveries since 1870?

A look back at the past 150 years of booms and slumps in the UK economy reveals shifts in how the labour market responds. While the government’s furlough scheme has averted much higher joblessness, it is likely to hamper recovery in output and reduction in the unemployment rate.

News

Northern Ireland at 100

The centenary of the creation of the Irish border offers a chance to reflect on the economic performance of the two Irelands over the last 100 years, as well as looking at some policy lessons from the past.

Transport & infrastructure

How is Covid-19 affecting international travel and tourism?

The pandemic has brought the travel industry to a halt. The development and distribution of vaccines are helping to get the virus under control, but until vaccination programmes are widely available, restrictions on international travel and tourism are likely to remain.

Lessons from history

Ireland’s economy since independence: what lessons from the past 100 years?

A century ago, advocates and opponents of Irish independence presented arguments about the future of Ireland’s economy outside the UK. With the benefit of hindsight, we can see that predictions made by both sides have come to pass at different points over the past 100 years.

Recession & recovery

Is higher productivity at odds with improved wellbeing in post-pandemic Wales?

The Well-being of Future Generations Act in Wales requires that long-term considerations of poverty, health inequalities and climate change are at the forefront of policy-making. Such goals could be at odds with productivity growth and traditional indicators of prosperity.

Business, big & small

Update: Which firms and industries have been most affected by Covid-19?

Businesses across the UK have been negatively affected by the pandemic, but the damage has not been equal. Certain sectors and certain firms within them have suffered more than others – and many have faced highly uncertain futures.

Aid & international development

Vaccine nationalism: why do some countries cooperate and others go it alone?

Faced with the severe health and economic damage caused by Covid-19, governments may wish to protect their citizens by securing vaccines first. But such ‘vaccine nationalism’ has consequences and may not be the wise choice in the longer term.

Jobs, work, pay & benefits

How might increases in the UK minimum wage affect jobs, work and pay?

Modest rises in minimum wage rates came into effect in the UK on 1 April 2021. Although rates have been uprated year-on-year since 1999, with little evidence of negative employment effects, the Covid-19 crisis makes the impact of these increases on jobs and pay highly uncertain.

New Post • Nations, regions & cities

What explains Northern Ireland’s long-standing problem of low productivity?

Low productivity is widely recognised as one of the most important economic challenges facing the UK. But it is a problem that has affected Northern Ireland’s economy for the past 100 years – and it is yet to be solved.

Lessons from history

What is the economic legacy of Northern Ireland’s Troubles?

The economy of Northern Ireland continues to be influenced by nearly 30 years of the Troubles. While there has been much economic improvement since the agreement finalised in Belfast on Good Friday 1998, the gains have been unevenly distributed.

Lessons from history

What were the economic consequences of Irish independence?

Following partition of the island of Ireland in 1921, the two successor states had to forge separate paths, both politically and economically. The experience of the early years of the Irish Free State offers lessons for today’s debates about independence from the UK.

Lessons from history

The Great Irish Famine: what are the lessons for policy-makers today?

Catastrophic risks force policy-makers to make quick decisions based on limited information. The Great Irish Famine shows how such existential crises and the state’s response can precipitate radical and permanent change. Ireland’s experience offers insights as we prepare for future emergencies.

News

Unequal effects

From the start, the pandemic’s impact has been felt unequally across the UK. Lockdowns have brought some industries to a standstill while others have been able to let their staff work from home. Smaller firms and the jobs of young people seem to have been hit hardest.