{"id":10880,"date":"2021-03-19T09:00:00","date_gmt":"2021-03-19T09:00:00","guid":{"rendered":"http:\/\/www.economicsobservatory.com\/?post_type=question&p=10880"},"modified":"2021-03-18T21:24:42","modified_gmt":"2021-03-18T21:24:42","slug":"a-year-in-lockdown","status":"publish","type":"question","link":"https:\/\/www.economicsobservatory.com\/test\/a-year-in-lockdown","title":{"rendered":"A year in lockdown"},"content":{"rendered":"\n

Newsletter from 19 March 2021<\/strong><\/p>\n\n\n\n

Exactly one year ago, the Prime Minister announced that the UK could \u2018turn the tide<\/a>\u2019 on the coronavirus crisis within 12 weeks. Those weeks have now turned to months \u2013 and while we may have grown strangely accustomed to life at home, few could have imagined that a year on we would still be in lockdown.<\/p>\n\n\n\n

With over 25 million people<\/a> now having received their first dose of the vaccine and a path<\/a> out of the restrictions mapped, the end of the pandemic might feel tantalisingly close. Yet its effects on people\u2019s lives \u2013 from the devastating loss of loved ones to missed education, job loss and financial hardship \u2013 will persist.<\/p>\n\n\n\n

Indeed, as one of our earlier newsletters said, we are perhaps only at the end of the beginning<\/a> of this crisis. That theme runs through this week\u2019s articles on the Economics Observatory, including the effects on trade, inequality and children\u2019s mental health. As the authors stress, these are complex challenges that will take time to overcome.<\/p>\n\n\n\n

School, interrupted<\/h3>\n\n\n\n

Last week, many children in England returned to school for the first time since their single day<\/a> in the classroom in January. Most will have missed as much as 21 weeks of in-person schooling, which has led to concerns about learning losses<\/a> and how they might be made up.<\/p>\n\n\n\n

But the focus of an Observatory piece by Jo Blanden, Claire Crawford, Laura Fumagalli and Birgitta Rabe is on the negative effect of school closures on children\u2019s mental health<\/a>. They show that those who have spent longer away from the classroom have experienced greater declines in their mental wellbeing \u2013 an effect that seems larger and may last longer than the direct impact on their education.<\/p>\n\n\n\n

Children\u2019s wellbeing had already dropped in 2020 compared with previous years, and it has declined further as the pandemic goes on, making these findings particularly worrying. Some children will be more affected than others: as Sarah Smith pointed out last week, teenage girls\u2019<\/a> mental health has suffered more than that of boys during lockdown.<\/p>\n\n\n\n

How long these effects will endure is unclear, but they are unlikely to subside quickly without policy action. To date, proposed educational measures, including additional tutoring, longer school days and shorter holidays, have focused on learning loss. But children\u2019s wellbeing needs to be taken into account, which could explain parents\u2019 limited support for extended time at school.<\/p>\n\n\n\n

Wealth inequality<\/h3>\n\n\n\n

Throughout the pandemic, those already vulnerable or in poverty<\/a> have experienced rising hardship. For example, over half of adults in families in the lowest 20% of the income distribution had to borrow money<\/a> last spring to cover everyday costs such as housing and food.<\/p>\n\n\n\n

Conversely, as Helen Hughson underscores in an Observatory piece on wealth inequality<\/a>, affluent households have been well placed to weather the storm. Not only does their wealth act as a buffer against income shocks or job loss, but evidence suggests that they have saved more during the pandemic than usual.<\/p>\n\n\n\n

Indeed, household savings as a proportion of disposable income grew by 19.5%<\/a> between the first and second quarters of last year \u2013 a record high since 1987. Fewer opportunities to spend on holidays, eating out and live entertainment have resulted in more money in the bank for the well-to-do \u2013 a total of \u00a344.6 billion more in accounts across the UK.<\/p>\n\n\n\n

The difference in debt and savings exacerbates existing wealth inequality, which is already striking. Financial<\/a> and business wealth make up a larger share of richer households\u2019 overall wealth. For those worth over \u00a310 million, these types of assets constitute 72% of their wealth, compared with only 10% for those with less than \u00a3250,000 \u2013 see Figure 1.<\/p>\n\n\n\n

Figure 1: Composition of wealth by total wealth<\/h4>\n\n\n
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