“It is a big and difficult question. How much of the economy is being shut down by the lockdown? Is very little happening, as it can easily seem, or is there quite a lot of activity alongside the social distancing and a huge increase in the number of people working from home? How much below normal are we?
Also, just as importantly, is it possible to increase the amount of economic activity taking place? I’ll come on to that.
I am not about to join the ranks of the irresponsible, and advocate that we ignore the coronavirus and carry on as normal for the sake of the economy. However, there may be room for nuance, to gradually bring on stream some activities that have been suspended.
Let me start with the first question: how much below normal is the economy operating at? The usual visual aids do not work. If you looked at the station car park near my home, you would think normal activity had slumped by 90% as there is only a handful of cars.
There are, of course, good reasons for that, as there are for the slump in all forms of transport in recent weeks. So I am indebted to the economists at the Centre for Economics and Business Research (CEBR) for an innovative attempt to estimate just how much is being lost at present.
More statistical information will emerge over coming weeks, though it will be harder for the Office for National Statistics (ONS) and others to collect the normal run of data because of shutdown measures. We know the second quarter of the year, which has just started, will be awful for the economy, but it will be a while before we know just how awful.
The CEBR’s research, carried out by economists Daryn Park and Owen Good, looked at the nearly 100 detailed sectors of the economy, on the basis of the standard industrial classification, and assigned each a score. For some, economic activity was continuing as normal, with most employees still in work. For many others, most staff had been sent home but were still working, and reckoned to be “producing” at 90% of normal level. A final category was where workers had been sent home and, because of the nature of their job, were not producing anything.”