The economic impact of lockdown is by no means going to be felt the same by anyone. We have to build an economic future which is based on the individual responses of the public, and which garners the political trust of the British people.
The disparity of impact that the lockdown is having on household finances is becoming clearer every day. The economic inequalities which were stark before the lockdown was introduced now look likely to become even more severe.
For those who were already wealthy, generally with significant digital skills allowing them to work from home and often living in London and the South East, lockdown has presented an opportunity to stockpile ‘forced savings’ as they have no choice but to avoid pubs, restaurants and summer getaways.
A report by the Resolution Foundation launched earlier this week found that this demographic were also far more likely to already be sitting on substantial savings than those working in the parts of the economy that will continue to suffer dearest.
People working in the hospitality and retail sectors, for example, were already far less likely to have any savings than those working in any other sector – and are now also most at risk of losing their jobs. Although there have been some promising green shoots of a bounce-back in spending, retail sales have plateaued and these industries will be in for a bumpy ride for the foreseeable future.
Regional inequality is also likely to intensify as a result of the crisis. Some initial findings in our Renew Normal survey indicate a desire to shop locally to support independent businesses and minimise travel distance. As well as making large UK retailers even more nervous about their future, this is likely to see wealth further concentrated in already well-off areas, and away from those areas already struggling.
Industry and location are also contributing factors to the divergent economic outlook between ethnic minorities. Black people are far more likely to work in industries being locked down and are far less likely to have any savings than white British people. Following the financial crash in 2008/09, the economic inequality between ethnicities was significantly worsened as BAME people suffered higher housing costs and lower incomes.
The gap also continues to widen between ages. The young, already less likely to have savings and most likely to rely on financially detrimental high interest credit are now most likely to lose their jobs in this crisis. Meanwhile, those on state pensions or those in middle age are often more insulated from the economic impacts of lockdown.
We know how damaging economic inequality can be to our social and political fabric. The 2008/09 crisis caused suffering sections of society to feel ‘left behind’, and the crisis in political trust which has spilled over for the last decade has led to arguably the most divisive and politically polarised era in modern British history. We must do all we can to prevent stark economic inequality having the same impact this time around.
Despite all the pain and sadness of not only the virus itself but the ensuing economic catastrophe, we can see this time as an opportunity to rebuild political trust. This means building a project of economic recovery based on the renewed priorities of the British public.
Policy makers therefore need to consult the public on how we use fiscal policy to share the burdens in a way that reflects our new priorities. No two people have endured the same experience during this lockdown period, as costs and incomes have fluctuated massively and people’s spending priorities have been re-evaluated. It is crucial, therefore, that as the coronavirus tries to drive a wedge between different sections of the public, everyone’s voice is heard and this time, nobody is left behind.