IEA comments on first lockdown anniversary

"Even if the vaccination programme slows down next month, we are in a far better place than anybody expected in January. The data continues to exceed expectations, but the dates in the government’s sluggish roadmap never move.

"Every extra day of lockdown produces diminishing returns and mounting costs. Waiting another two months for hospitality to reopen seems excessive when people will be meeting in their homes regardless of government diktats.

"We should keep a watchful eye on the data, but we should not stick stubbornly to an arbitrary timetable. There is now a strong case for bringing the roadmap forward by four weeks."

Commenting on the economic impact of lockdown, IEA Economics Fellow Julian Jessop said:

"After the initial collapse last spring, when GDP shrunk by nearly a quarter in just two months, the UK economy has actually held up better than many had expected. Unemployment has remained relatively low and there is plenty of pent-up demand in both consumer and business spending. Activity should now recover quickly this year as Covid restrictions are lifted.

"This resilience is partly a reflection of the extraordinary and awfully expensive support that the government has provided to protect businesses, jobs, and incomes during the lockdowns. But it is also a tribute to the flexibility of the UK’s market economy, demonstrated by the switches to online spending and homeworking, and early signs of a rapid turnaround in employment.

"The government can therefore best help the recovery by getting out of the way, withdrawing the emergency support as soon as it is no longer needed and allowing stronger market-led growth to repair any damage to the public finances.

"The tax increases announced in the March 2021 Budget were unnecessary and potentially counter-productive. The government should focus instead on shrinking the state, at least back to pre-Covid levels, rather than intervening even further."