Monday 5 October 2020 5:00 am

Why a second lockdown could turn the lights out on the UK economy

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James Reed is chairman and chief executive of recruitment firm REED.

We have reached a crucial flexion point in the fight against Covid-19, and with this comes new, tighter rules to curb a possible second wave. There is now rising concern that a second wave may result in a second national lockdown, and businesses are urgently seeking reassurance from the government that they will be able to stay open over the next six months.  

While I agree that extra measures might be needed to combat the spread of this disease, a blanket second full lockdown will certainly drive a coach and horses through the early signs of economic recovery.

Read more: More than 1,000 UK pubs plead for government help after dire Friday trading following 10pm curfew

Senior ministers, including the foreign secretary and the Prime Minister, warned last week that another lockdown may be necessary in the lead up to Christmas if the new measures don’t work. But we must first consider the impact such harsh restrictions would have on mental health, education, and jobs. 

According to the Mental Health Foundation, over a third of people in full-time work admitted to having anxiety about losing their jobs during the first lockdown. And among those who were unemployed, a quarter reported not coping well with the stress of the pandemic, almost half were worried about not having enough food, and one in five experienced suicidal thoughts.

Another lockdown during winter will see these anxieties re-emerge with a vengeance, and it will throw the UK into another negative spiral of economic and social uncertainty. The consequence of this will be further job losses, increased long-term job insecurity, rising crime, and more children living in poverty. Many people will become socially and economically isolated, and national health, wealth and wellbeing will all be adversely impacted.  

Read more: As well as protecting jobs, the government must enable a safe return to the workplace

The chancellor’s Winter Economy Plan announcement was a step in the right direction in terms of protecting jobs and livelihoods, but more needs to be done to help people learn new skills and transition into new sectors. 

There has also been widespread criticism of the recent decision to introduce a 10pm curfew, with weekly figures from Public Health England showing that pubs and restaurants caused just three per cent of England’s outbreaks in the week prior. Government announcements have also negatively impacted high street footfall, which had previously been showing a gradual increase. Following the latest announcement, footfall declined by 6.8 per cent across UK high streets, with visitor numbers falling 36.4 per cent between 10pm and 12am on Friday compared to the previous week. 

In many ways, the closing of restaurants at 10pm leaves us in a limbo state with the worst of both worlds: disrupting the economy, without a firm guarantee of halting the proliferation of the virus. To take this type of policy further would be completely crippling for our economy at a time when businesses need all the support they can get. 

A lockdown is a short-term fix based upon the hope that a vaccine for Covid-19 is just around the corner, which it may or may not be. It’s something that should only be considered as an absolute last resort, after all other options have been exhausted.

Read more: Quarter of a million pub jobs at risk as curfew stifles hospitality recovery

Currently, we’re in a twilight zone – the period between full lockdown and no restrictions. We do not yet fully understand the economic impact of the pandemic, nor can we predict what the next six months have in store for businesses. 

But with so much at stake, I urge the government to step back, take a considered view of the huge human collateral damage that would arise from another lockdown, and not make any decisions in haste. We must keep the economy moving, because a stop-start approach is bad for jobs, bad for people, bad for business, and ultimately bad for our society.

Main image credit: Getty

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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