A year of Covid-19 lockdowns has cost the UK economy £251 billion ($347.62bn), equivalent to nearly twice the annual output of Scotland, according to a new report.
The Centre for Economics and Business Research’s study showed that coronavirus was the main cause of the £251bn reduction in the UK’s gross value added (GVA), a figure that measures the value of goods and services produced by the economy minus the costs of inputs and raw materials needed to deliver them.
“To highlight the scale of this loss in activity, this reduction is roughly equivalent in size to the entire annual output of the south-east, in pre-Covid circumstances, and nearly twice the output of Scotland,” said Sam Miley, economist at Cebr.
A year ago this week, workplaces, shops and businesses across the country shut their doors, with office employees forced to work remotely to help curb the spread of Covid-19.
Twelve months on and parts of the UK have endured three lockdowns, with widespread uncertainty for many individuals and businesses and government intervention becoming the norm for the economy.
“Consumer footfall has plummeted, businesses are still shut, and many individuals have found themselves out of work,” Mr Miley said.
“These factors, amongst countless others, have entailed a huge cost to the UK economy, in addition to the devastating cost of thousands of lost lives.”
The crisis caused the economy to contract by almost 10 per cent last year – the largest decline in 300 years – while gross domestic product was 9 per cent below its February 2020 level last month, according to the Office for National Statistics.
Meanwhile, the total cost of dealing with Covid is expected to hit £407bn, due to the large bill for job support measures, with the government already shelling out £352bn of that figure to protect livelihoods and businesses.
The Covid-19 losses across the country were the highest in London, with £51.4bn of lost activity in the capital, the Cebr study found.
This was followed by the south-east and east of England, with losses of £34.7bn and £26.6bn, respectively.
Despite the grim figures, Mr Miley said the economy is still expected to return to pre-pandemic levels of output in the next 12 months.
However, some regions may be subject to lingering effects of the pandemic, such as higher rates of joblessness and a greater degree of business closures.
“If the government is truly committed to addressing regional imbalance, it will not allow these areas to disproportionately bear the weight of the losses brought on by the pandemic. To do otherwise would risk further divergence in fortunes,” Mr Miley said.
Separately, a new report from the Resolution Foundation found that half of all UK workers saw their pay fall in real terms last year.
The research group said on Monday that the plight of those hit hardest by the pandemic -mainly the younger generation - contrasts with official data showing a sharp rebound in average earnings following the first coronavirus lockdown last spring.
The disparity is due to the disproportionate impact of the crisis, which has destroyed hundreds of thousands of jobs in sectors such as retail and hospitality where workers are often younger and low-paid.
The number of jobs furloughed through the Job Retention Scheme rose to 4.8 million in the first quarter of this year, while government figures, set to be published on Tuesday, are expected to show wage growth accelerating to a 13-year high. This indicates that the average person still in employment is receiving a higher salary than before the crisis.
However, the Resolution Foundation said the damage to the incomes of the young could scar their prospects for years to come, with weak pay likely to continue beyond the end of this year.
“Returning to employment growth and a tight labour market as quickly as possible, alongside continued increases in the minimum wage to support lower-paid workers in particular, will be crucial for boosting living standards as the recovery takes hold,” economist Hannah Slaughter wrote in the report.