Questions and answers about coronavirus and the UK economy

Business, big & small

How is the coronavirus crisis shaping self-employment?

The self-employed have been hit particularly hard by the recession. Government support has been generous for many, but others have fallen through the cracks. Looking ahead, there are signs that self-employment is starting to undergo significant changes.

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How can competition authorities tackle price rises in a crisis?

From the outset of the pandemic, there were reports of retailers charging exceptionally high prices for certain products, notably hand sanitiser. Investigations by the Competition and Markets Authority have played an important role in quelling the practice.

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How is professional football coping with coronavirus?

Playing without spectators prevents football matches from becoming Covid-19 super-spreaders, but it has potentially devastating financial consequences for lower tier clubs. The empty stadiums are also revealing the influence of crowds on refereeing decisions.

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#economicsfest: How can the arts recover?

Since the arts world needs crowds, it has become one of the major economic victims of Covid-19. Uncertainty about the future of big gatherings and how to make them safe is hitting organisations, staff and the army of freelancers who make this sector work.

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#economicsfest: What future for farming and the food supply chain?

The UK’s agriculture sector faces multiple challenges to which it must adapt quickly – including Brexit, Covid-19 and environmental degradation. Higher public spending and agricultural policy reforms offer an opportunity to re-evaluate our approach to the countryside.

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Data: The vaccine and the stock market

Figure showing Pfizer & AstraZeneca share prices Read more

How is coronavirus changing national payment systems for healthcare providers?

Fears of infection have left many people reluctant to go to hospitals and GPs during the pandemic. In many countries, the large reduction in services has put the financial sustainability of healthcare providers at risk under existing payment arrangements.

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How might the autumn lockdown affect different sectors of the economy?

Because renewed lockdown is intended to be shorter and less strict, the damage to economic growth is likely to be smaller than previous measures. If it can help to bring Covid-19 under control, the longer-term benefits to the economy could outweigh the short-term costs.

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How is coronavirus affecting the UK’s retail sector?

UK retailing has been deeply affected by Covid-19 – but the effects are far from uniform and, to an extent, they are accelerating structural changes already happening. Re-opening has seen some reversal of the damage from lockdown, but the long-term direction of the sector remains unclear.

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How is coronavirus affecting the insurance industry?

Covid-19 has caused severe disruption for insurance companies, not least as they are in the business of pricing risks and a pandemic was thought of as a low probability event. But the economic fallout from the crisis may act as a catalyst for positive change in the industry.

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Should selective government support replace the job furlough schemes?

As the UK’s job furlough scheme winds down, the government has shifted towards measures to support businesses and employees in local lockdowns. But even if Covid-19 eases, policy-makers will need to retain the capacity for selective sectoral assistance – and clarity on ‘state aid’.

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How can authorities control coronavirus without killing the economy?

Severe restrictions introduced in response to Covid-19 have disrupted economic activity, especially retail, services and hospitality. Evidence from local lockdowns suggests that it is possible to control the virus without resorting to measures that damage the economy.

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Could a national investment bank support recovery from the Covid-19 crisis?

The unprecedented challenges brought by coronavirus will require an investment-led recovery at a time when confidence in the economy is weak. The establishment of a national investment bank could foster a more positive climate for growth, promoting innovation, employment and improved productivity.

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How has the Covid-19 crisis affected pre-school childcare?

More than a million 0-4 year olds stopped attending childcare during lockdown. This led to them missing out on social and educational opportunities, parents struggling to balance work and childcare, and financial losses for childcare providers. The prospects for the sector are highly uncertain.

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How are firms in emerging markets reacting to the coronavirus crisis?

Firms in emerging markets have suffered at least as much from Covid-19 as those in advanced economies. Evidence suggests that they have cut investment rather than laying-off staff. They have also been flexible with suppliers and business partners, and tried to support their communities.

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How have past pandemics affected business?

Almost all UK firms and industries have been badly affected in the short term by the spread of Covid-19. Looking back at past pandemics – the Black Death, the Great Plague of London and the Spanish flu – provides some perspective on longer-term prospects for business.

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How will coronavirus affect occupational pensions?

The recent volatility of financial markets and the monetary policy response to the Covid-19 crisis have led to renewed concerns about the funding of occupational pensions. The impact will be felt by scheme sponsors and members – and in the viability of the Pension Protection Fund.

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How does lockdown affect firms in developing countries?

Lockdown led to a severe demand shock for firms, especially in the hospitality, transport and retail sectors. Analysis of administrative tax data suggests that half of formal firms may become unprofitable, exit rates double and tax revenues from firms fall by over 1.5% of GDP.

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Will coronavirus accelerate the move towards a cashless economy?

The use of cash fell substantially in the early days of the Covid-19 pandemic with the acceleration in online shopping and contactless payments – but cash usage has bounced back as lockdown has eased. Long-term prospects for retail payments remain uncertain.

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What will be the effect of coronavirus on gig economy workers?

If demand for ‘gig economy’ work increases as companies try to save costs in the Covid-19 recession, that could allow more people to work flexibly. Alternatively, if more people enter the gig economy, perhaps because they can’t find other jobs, competition for limited ‘gigs’ could increase.

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What financial support is needed for artists and the arts in the pandemic?

Coronavirus has struck a particularly hard blow to the performing arts and those whose livelihoods depend on them. Having multiple sources of financial support available for the arts and artists increases the likelihood of meeting their many and varied needs.

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How is coronavirus affecting the banking sector?

While the banking sector will be negatively affected by the pandemic, it is also critical for economic recovery. But the crisis will strengthen competitive pressures on banks by accelerating trends towards digitalisation and new financial service providers.

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What will coronavirus mean for innovation by firms?

While some firms have introduced some important innovations in response to the crisis, the experience of past recessions suggests that innovative activities by the private sector are likely to be dampened for several years following the pandemic.

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What do we know about the impact of coronavirus on the creative industries?

Given the wide variation in how the products of the creative industries are made and consumed, the effects of Covid-19 are very different. And given the diversity of ways of working across the industries, so too are the measures needed to counteract the damage.

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How can production network analysis inform policy on Covid-19?

The economy is characterised by intricate linkages between consumers, businesses and sectors across national and global supply chains. Production network analysis provides insights into the effects of imposing and lifting lockdowns – and policies to support recovery.

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How is coronavirus affecting the creation of new firms and new jobs?

New business creation is a key part of any economy, notably for generating new job opportunities. The sharp decline in start-up activity in the UK during lockdown is likely to have a strongly negative impact on aggregate employment in the future, regardless of the shape of the recovery.

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How have Big Tech and other digital platforms fared in the crisis?

While coronavirus and the policy response have led to an abrupt economic slowdown, lockdown has rapidly accelerated the spread of information technology. Are the internet giants winners or losers in this crisis? And what of other digital platforms, including Zoom?

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What will happen if trade and mobility are permanently reduced?

It is unclear how long restrictions on trade and travel will remain in place – and too soon to say if coronavirus will permanently reduce cross-border flows of goods, services and people. But there is plenty of evidence on the potential damage to the world economy.

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What does coronavirus mean for the future of sport and fitness clubs?

With the closure of indoor sports facilities, many people have shifted to alternative forms of exercise. Even after re-opening, this is likely to affect gym owners and staff. Some previous gym users may also be getting less exercise, leading to concerns about rising obesity.

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How has coronavirus affected pubs, cafes and restaurants?

The restaurant industry was effectively brought to a halt by lockdown. Since re-opening, there have been modest signs of recovery, but social distancing and widespread working from home continue to limit progress – and the sector is typically hit hard by recessions.

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Is the banking sector safer than during the global financial crisis?

Stress tests of major banks in 2019 suggested that the sector was sufficiently capitalised and had enough liquidity to withstand big economic shocks and continue to meet the financing needs of households and firms. But is it safer than 10 years earlier? And is it safe enough to cope with economic damage from coronavirus?

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What future for apprenticeships after coronavirus?

The Covid-19 pandemic and the ensuing economic uncertainty are causing interruptions to apprenticeship training. This is putting the future of apprenticeships at risk just at the time when they will be most needed to protect employment and sustain the recovery.

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How will coronavirus affect the UK’s oil and gas industry?

The oil and gas sector is wrestling with the dual shock of Covid-19 and substantial falls in the oil price, some of which predated the crisis. What are the implications for the industry – and for exploration and development activity in the UK continental shelf?

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Does the world economy face a danger from rising protectionism?

The Great Recession of 2008/09 seems to have broken the link between recessions and higher barriers to imports. During the coronavirus crisis, new forms of protectionism, such as export controls and trade-distorting stimulus programmes pose a more serious risk to unfettered trade.

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What has coronavirus taught us about working from home?

The pandemic has now forced millions of people to work from home, typically those with higher incomes and in higher-income economies. Surveys suggest that, to date, employers have been positively surprised by the efficacy of this new way of working.

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Sport: what could be the long-term effects of coronavirus?

Professional sports events without spectators look set to be the norm for the foreseeable future. How is this likely to affect the economic viability of clubs, how might fans respond and what are the potential implications for grassroots participation in sport?

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How is coronavirus affecting the self-employed?

The self-employed are being hit particularly hard by the Covid-19 crisis. Many have been offered a lifeline through the government’s Self-Employment Income Support Scheme – but does it go far enough?

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Why is uncertainty so damaging for the economy?

The Covid-19 pandemic and policy responses have made life much more uncertain for everyone – individuals, organisations and governments. What impact does all this uncertainty have on the economy and how can policy-makers respond?

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

Almost all UK businesses have been badly affected by the spread of Covid-19, but some industries have been hit harder than others. Financial market data and surveys of firms themselves provide insights into the scale of the impact on sales, employment, supply chains and business uncertainty.

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Should Brexit trade policy changes be delayed because of Covid-19?

Brexit has happened – but the nature of the UK’s future economic and political relationship with the European Union is yet to be determined. There is a strong case for extending the transition period to allow both sides to focus on dealing with the Covid-19 crisis.

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How can we encourage medical breakthroughs to combat Covid-19?

Public and private sector organisations across the world are working on vaccines and medicines to fight the coronavirus. What kinds of incentives are most effective in promoting the development of new medical technologies and the rapid manufacture of tests and treatments?

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Funded by

UKRI Economic and Social Research Council
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