By Lola Miller
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The national month-long lockdown in England ends today – the 2nd of December. Citizens are now entering a system of regional tiered restrictions. The tiered system enforces varying limitations upon socialising and businesses according to the severity of the coronavirus outbreak in each region. This tiered system had been in operation prior to the November lockdown, but the restrictions in each tier have now been tightened. The tier rating of each region will be reviewed every fortnight, the system itself to be held in place until March 2021.
Under this system, Tier 1 dictates that you cannot meet with more than six people – colloquially referred to as the ‘rule of six’. Tier 1 further stipulates that hospitality venues must provide table service, most close at 11 pm, and cease serving at 10 pm. Wedding ceremonies are restricted to 15 people, and funerals can have 30 people in attendance. Indoor entertainment venues – such as cinemas or theatres – must operate at whichever is lower, 50% capacity or 1000 attendees, and must continue to observe social distancing.
In Tier 2, these restrictions are increased: there is to be no mixing outside of your household or support bubble in an indoor setting, and hospitality venues must close unless operating as restaurants. Alcohol can only be served as part of a substantial meal.
If in a Tier 3 region, it is forbidden to meet anyone outside of the household/support bubble, whether indoors or outdoors. Hospitality venues are closed, although allowed to operate takeaway and delivery services, accommodations such as hotels are closed, as are indoor entertainment venues.
On December 2nd, Manchester, Birmingham, Newcastle and Bristol will enter Tier 3 – only 1% of the country will be in Tier 1. The economic impact of these restrictions will be vast; one economic forecaster estimated that the daily decline in GDP (Gross Domestic Produce) is 20 per cent under Tier 3. This is unfortunate given the already momentous losses incurred by the UK since the outbreak of coronavirus earlier this year.
On November 25th, a spending review released by Chancellor of the Exchequer Rishi Sunak revealed that the United Kingdom will face the worst economic decline in 300 years due to COVID-19. It is anticipated that the slump will approach -10 per cent and that the unemployment rate could reach 7.5 per cent within the next year. This would almost double the unemployment rate of 2019, which was 3.85 per cent. Further, the GDP is projected to contract by 11.3 per cent; contextually, the UK economy took five years to recover after a contraction of 6 per cent during the 2008 recession.
The PWC projects economic growth of between 6.0-3.4 per cent across 2021, however, this is a vast decrease from their optimistic September estimated recovery rate of 10.1 per cent next year. They cite “the introduction of a second national lockdown in England and slow progress in UK-EU trade negotiations” as influencing the dramatic changes to their earlier predictions.
Andrew Bailey, the governor of the Bank of England, last week warned that the economic impacts of a no-deal Brexit would be even more devastating than those caused by COVID-19. He is supported by a London School of Economics model which shows a ten-year reduction in GDP of 8% when compared to staying in the EU.
That the economy is projected to suffer more as a result of Brexit is deeply worrying given the astronomical economic detriments of COVID-19 already experienced by individuals. According to the findings of Socio-Economic Impacts of COVID-19 by City Intelligence Unit, the number of Londoners claiming out-of-work Universal Credit had in September seen an increase of 163 per cent since March. Even more disheartening is the report by Crisis, a national homelessness charity, which found that over half of frontline services had witnessed a rise of homelessness since the outbreak of the pandemic.
Naturally, the government must work to contain the virus and protect the health of UK citizens. On Sunday, the total of those who have tested positive for coronavirus had reached 1,617,327, with over 58,000 related deaths. Nonetheless, public frustration is rising as the financial repercussions of the virus are realised. Eyebrows have also been raised at the temporary lifting of restrictions planned from 23rd-27th December, during which time three households will be able to mix. Matt Hancock cites the importance of “Christmas as a national holiday”, but concerns regarding a potential spike in infections and subsequent tightening of restrictions have been voiced.
The total economic impact of the coronavirus on the United Kingdom can only be realised retrospectively. The current financial forecasting, however, presents us with the grim news that the UK economy will suffer in the wake of COVID-19 (particularly in combination with Brexit) for a long time to come.
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