Spending splurge before Covid lockdown 2 reveals the true trade-offs
Anyone tuning in early on Halloween to see the Strictly contestants strut their stuff would have found themselves watching the prime minister giving a press conference from Downing Street.
Boris Johnson had his serious face on and little wonder because he was telling people in England that a fresh four-week lockdown was coming. To give the gloomy message extra weight, he was flanked by his chief medical officer and his chief scientific officer.
Johnson did not need to be told by Rishi Sunak what significantly tighter restrictions would mean for the economy. The experience of the first lockdown – in which output contracted by a fifth in a single quarter – was still fresh. But opinion polls showed that the pubic overwhelmingly supported the tough new measures. More than 70% of those questioned said they were happy to be put under mild form of house arrest if that’s what it took to reduce Covid-19 infection rates.
What you can and can’t do in England’s national Covid lockdown
New national restrictions are due to come into effect in England on Thursday, after MPs vote on them, and remain in place at least until 2 December.
- For childcare or education, where it is not provided online.
- To go to work unless it can be done from home.
- Outdoor exercise either with household members or with one person from another household.
- For all medical reasons and appointments.
- To escape injury or harm, such as domestic abuse.
- To provide care for vulnerable people or volunteer.
- To shop for food and essentials.
- To see people in your support bubble.
- Children will still be able to move between homes if their parents are separated.
Government say the list is not exhaustive, and other permitted reasons for leaving home may be set out later. People could face fines from police for leaving their home without a legally permitted excuse.
No, not unless they are part of an “exclusive” support bubble, which allows a single-person household to meet and socialise with another household.
Parents are allowed to form a childcare bubble with another household for the purposes of informal childcare, where the child is 13 or under.
People are allowed to meet one person from another household socially and for exercise in outdoor public spaces, which does not include private gardens.
Up to 30 people will still be allowed to attend funerals, while stone settings and ash scatterings can continue with up to 15 guests.
Weddings and civil partnership ceremonies are not permitted except in “exceptional circumstances”. Places of worship must remain closed except for voluntary services, individual prayer and other exempt activities.
Most outbound international travel will be banned. There is no exemption for staying away from home for a holiday. This means people cannot travel internationally or within the UK, unless for work, education or other legally permitted exemptions.
Everything except essential shops and education settings, which include nurseries, schools and universities, will close.
Entertainment venues will also have to close. Pubs, restaurants and indoor and outdoor leisure facilities will have to close their doors once more.
However, takeaway and delivery services will still be allowed, while construction and manufacturing will stay open.
Parents will still be able to access registered childcare and other childcare activities where reasonably necessary to enable parents to work. Some youth services may be able to continue, such as one-to-one youth work, but most youth clubs will need to close their doors.
Public services, such as jobcentres, courts, and civil registration offices will remain open.
There is no exemption for grassroots organised team sports. Elite sports will be allowed to continue behind closed doors as currently, including Premier League football matches.
In the light of those findings, it is interesting to see what happened next. Leaks of Johnson’s plan meant he had to announce it early and then there was a four-day delay before it actually into force, during which time people flocked to the shops and headed to restaurants and bars. Open Table, a site that tracks online restaurants reservations, shows bookings on the day after the PM’s announcement were up by 11% on the same day a year earlier. By the Wednesday night they were up 70% year on year.
It was a similar story for footfall in retail parks, which in the three days leading up to the lockdown was above 2019 levels for the first time since the Covid-19 crisis began. Footfall for all parts of the retail sector subsequently fell off a cliff when all but essential shops were closed.
To a scientist this might seem illogical. The number of Covid-19 cases was increasing; the public said it supported tougher measures; ergo they should have been hunkering down even before the new restrictions came into force.
Economists, on the other hand, say less attention should be paid to what people say and more to what they do. As Paul Ormerod noted in a recent blog, people reveal what they prefer not in the answers they give to opinion pollsters but in their actions. It’s how they behave that counts.
So, when news emerged of a possible vaccine for Covid-19, there was a surge in inquiries for foreign holidays next year. Despite what they might say to pollsters about the importance of cutting down on air travel to tackle climate change, the revealed preference of many individuals was to jet away to the sun as soon as they possibly can.
Presumably, the people who went out for Sunday lunch on 1 November were aware of the risks but thought they were worth taking. They were happy to wear face masks and abide by social distancing protocols but having weighed up the pros and cons decided to chance it.
NHS Test and Trace has been having trouble reaching contacts of positive Covid-19 cases, saying the reason is that people are reluctant to answer calls from unknown numbers. Another explanation is that people don’t want to be contacted by NHS Test and Trace because they fear they will be told to go into quarantine and be worse off financially.
This all runs counter to the notion that there is no trade-off between health and the economy. Clearly, each of us is making our own individual trade off, and that trade-off changes over time. When infections were low and the government was offering incentives to eat out, people piled into restaurants. When the incentives were removed, numbers dropped again. When restaurants were about to be closed again in England there was a rush to get in one last meal before the shutters came down.
The way people behaved in the four days leading up to the new lockdown was imposed in England provides a big clue as to what will happen if the government sticks to its current plans and eases the restrictions on 2 December. Footfall to shops will increase, the bars will be rammed, restaurant bookings will increase and families will enjoy being able to meet up again.
The Bank of England is expecting a return to the tiered system of restrictions was in place during October and for it to stay in place until the end of the first quarter. Rishi Sunak’s decision to extend the furlough to the end of March suggests the Treasury is thinking along the same lines. But scientists on the government’s Sage committee say a return to the tiered system risks a pre-Christmas surge in coronavirus cases. That would lead to pressure for another lockdown in the New Year.
Mohamed El-Erian, president of Queens’ College Cambridge, says the problem for most governments is that they are trying to solve an equation with three variables: public health, a normal economy and individual freedom. China, he says, manages to solve the equation by not worrying about personal freedom.
In the UK, lockdown fatigue has well and truly set in, which is one reason why the restrictions are not as onerous in England this time as they were in March and April. There is an urgent need to get test and trace working better, using incentives such as more generous sick pay to persuade people to self-isolate. The option of cracking down on those demanding the right to shop and socialise doesn’t really exist in Britain, and repeated lockdowns are not the answer either. They will lead to more flouting of the rules and permanent economic damage.
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