The economic impact of Covid: a bounce back after recession?

Dr Nirmala Lee, Associate Professor in Accounting, Banking and Finance, expects to see an increase in both supply and demand, leading to more jobs becoming available post-pandemic.

Date: 30 June 2021

In the summer of 2021, as in the summer of 1945, the UK economy is poised on the edge of an uncertain future: in 1945 it was the end of a World War; in 2021 it is the hoped-for end of the war on the Covid pandemic.  During the global recession that follows wars of this nature, entire industries reach the verge of collapse, there are widespread job losses and many people move from jobs to furlough.  But today is a turning point - today there is hope. 

Today the Job Retention Scheme, known as the furlough scheme, is being tapered and phased out by September 2021. Job markets which had frozen due to the pandemic and the quirks of the furlough scheme, are set to thaw out and more people expected to move from furlough to job, and new jobs expected to be created post-pandemic. 

Today, the full stamp duty holiday, that had fuelled a rise in house prices, comes to an end and will be tapered to the original rates by October 1; with interest rates remaining low, homes are forecast to become more affordable for the younger generation 

Today, the year-long business rates holiday no longer applies in England. The expectation is for a gradual return to a more entrepreneurial and market-driven environment.

Both supply and demand for goods are predicted to increase, leading to more jobs becoming available post-pandemic. When wars and war-like situations are over, people are ready to spend their accumulated household savings, as pent-up demand fuels the rise in supply of flights and holidays and consumer goods. The outgoing Bank of England Chief Economist Andy Haldane has likened the economy to a coiled spring as households prepare to spend the money that they have saved after being confined to their homes during enforced lockdowns.

There is reason for optimism about the British economy: we have innovators and entrepreneurs and researchers who are second to none in the world.  The UK economy is reported to be recovering faster than what had been predicted earlier. Consumer confidence is registering a generally upward trend despite anxieties about the Covid delta variant.  The Bank of England is talking about a strong bounce back while continuing to be dovish in the face of inflationary fears as the economy starts to recover. An investment boom looms on the horizon.  The UK is attracting more investment than elsewhere in the EU and is surging ahead as the European leader in digital tech and R&D, boosting digitisation in a post-COVID world. Many businesses are seeing labour shortages that they are trying to fill.

Studies have shown that increased levels of education of the workforce lead to greater levels of productivity and enhanced human capital. Education and technological skills are widely accepted as the major determinants of productivity growth. During the downturn due to the Covid pandemic, those with education and technological skills able to work in a remote environment fared better than those whose jobs depended on work in a physical environment. 

Now more than ever is the time to go to university, to upgrade existing skills, to develop new skills and to master lifelong learning skills in readiness to meet the new opportunities and challenges being opened up during the economic bounce back that is starting to appear. In London Metropolitan University, students have opportunities to sharpen their remote learning and working skills; master software applications such as Sage, SPSS and NVivo, and attend courses that offer the opportunity of joining the elite group of Bloomberg users around the world.

The forecast is in place for the biggest economic bounce back since World War II.  For the students who become business-ready graduates equipped with all the right skills to meet the challenges of the evolving workplace, a jobs boom is waiting: In the words of Shakespeare, they will be ready for the tide in the affairs of people, which taken at the flood, leads on to fortune. 

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