Date of Award

Spring 2021

Thesis Type

Open Access

Degree Name

Honors Bachelor of Arts

Department

Economics

Sponsor

Dr Anca Voicu

Committee Member

Dr Mari Robertson

Committee Member

Dr Zeynep Teymuroglu

Abstract

This thesis analyses the macroeconomic impacts of Covid-19 and the lockdown on the UK’s economy. GDP in the second quarter of 2020 fell by 19%, the largest quarterly decrease in GDP for the UK on record. Consumption and investment in this quarter decreased significantly resulting in the large decrease in GDP. The unemployment rate remained relatively low, for the large decrease in GDP, throughout the pandemic and only increased to 5.0% in December 2020. The effective Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme (SEISS) have kept unemployment low. The schemes have paid for 12.2 million workers’ wages from the start of the pandemic to December 2020. Inflation decreased along with GDP to 0.5% in August 2020 and remind constant for the remainder of 2020. The UK therefore had deflationary pressure at the end of 2020 but inflation remained above 0%. The UK introduced multiple fiscal, monetary, and health policies that all impacted the economy during the pandemic. The UK’s fiscal policy was very effective at protecting businesses and jobs and kept the unemployment rate low. Monetary policy had little effect on stimulating investment and consumption during the pandemic as the lockdown forced people to reduce their economic activity. But the quantitative easing program that has increased may prevent any deflation from occurring and stimulate the economy when the UK removes restrictions. The UK’s health policy has had the greatest economic impact with the lockdown causing significant reductions in economic activity and GDP. However, the country’s vaccination program is the path to stopping lockdowns and returning economic activity to pre-pandemic levels. To allow for quicker economic recovery it is important that the UK boosts consumption and keep unemployment levels low.

Comments

Committee Member: Dr Martina Vidovic

Rights Holder

Elliot Wylie

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