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Coronavirus: Four ways the economy has been affected

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A quick walk down any deserted high street or a video chat with friends and family is a reminder that currently it is anything but business as normal.

But for the first time the UK’s official number-crunchers, the Office for National Statistics (ONS), has put out a comprehensive account of how the British economy has been affected so far.

Here are four things we learnt:

1. Almost half of companies were suffering before the lockdown

Of the almost 4,000 companies the ONS spoke to, 45% said their takings were substantially below normal between 9 and 22 March; almost all attributed that to the fallout from Covid-19.

And they were responding largely before Prime Minister Boris Johnson announced the enhanced restrictions on movement and closure of non-essential businesses, including gyms, hairdressers, cinemas and pubs, on 23 March.

So the next set of figures are likely to show a big rise in the level of suffering. Economists are warning that activity could have dipped by as much as 15% across the quarter.

2. Over a quarter of firms were intending to lay off staff temporarily

Again, this was largely ahead of the closure of non-essential businesses and the announcement of the government’s Job Retention Scheme.

The scheme allows organisations to furlough staff who were on the payroll up to the 28 February (even if they were laid off or left subsequently), with the government covering up to 80% of salaries.

So again, the numbers will have risen since – probably sharply. And this of course doesn’t cover all affected workers.

Other figures have shown that the number applying for universal credit, many of whom will have been self-employed, have risen by 950,000 in just two weeks.

Even with the furlough scheme, some economists say the UK unemployment rate could double to 8% this year.

3. The cost of cold and flu remedies has shot up

As the demand for hand sanitiser, soap, and loo rolls, soared, so too did concerns of excessive price mark-ups.

The Competition and Markets Authority even set up a coronavirus task force to deter price gouging.

But how real are these fears?

The ONS said that almost 70% of businesses reported that prices of their products were unchanged.

Only 12% admitted to raising prices but in many cases this was due to problems with getting hold of supplies.

The ONS has also zoned in on some of the current must-haves, monitoring the price of items from toilet rolls to vitamin C online.

It found that cold and flu remedies were 10.7% more expensive in the last week of March than in the previous week .

This is on top of reports of price rises earlier in the month which pharmaceutical companies have blamed on rising demand and a scarcity of raw materials.

Other items have seen prices vary by far less with some, such as antibacterial wipes and baby food seeing falls recently.

As yet, there’s little evidence here of a significant impact on the overall cost of living.

4. Many firms that export or import have had supply chain issues

Roughly six out of ten of the firms the ONS heard from neither import or export.

But of those that do, more than half reported disruption. This is presumably down to interrupted production around the globe – perhaps inevitably in the face of movement restrictions, shuttered factories and offices and depleted workforces.

The ONS survey doesn’t reveal the extent of the disruption – it may just a be a slight delay.

However, given today’s highly integrated global supply chains, this could flag supply issues with some imported items down the line.

But the report also shows traffic though ports up to 28 March is holding up. And we know that airlines and the shipping industry are working with government to maintain the transport of essential cargo.

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KALPESH RUDANI

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