Modelling the Impact of the Coronavirus Pandemic on the UK economy

Lead Research Organisation: National Institute of Economic & Soc Res
Department Name: National Institute of Economic & Soc Res


This proposed project seeks to use and develop NIESR's modelling capability to estimate the short term impact of the coronavirus pandemic on the UK economy, and to assess longer-term issues on how the economic recovery is affected by different policy measures. An aim of this project would be to use the experience of modelling the coronavirus pandemic to establish a dynamic sectoral model of the UK economy that can be used in the analysis of supply-side policy issues. The model will be disseminated through the National Institute's NiGEM software package, which is widely used by UK and international policy makers.


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Lenoël C (2020) PROSPECTS FOR THE UK ECONOMY in National Institute Economic Review

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Hande Küçük (2021) National Institute UK Economic Outlook Brexit Britain in Covid Recovery Ward in National Institute UK Economic Outlook - February 2021

Description One of the effects of the coronavirus pandemic has been to highlight the interconnectedness of different sectors of the UK economy. Different parts of the economy are not independent but are related to the extent that they create supply and demand for other sectors. This means that locking down sectors of the economy where social distancing is not practical also has spillover effects on other sectors where people can more easily work at a distance from home. In work carried as part of this project we calculated that stay-at-home measures that directly reduced GDP by 15 per cent could reduce GDP by 25 per cent once spillovers are taken into account. The spillovers mainly impact on 'downstream' sectors like finance, consultancies and utilities, activities that can be performed adequately away from the usual workplace. In the first lockdown it appeared that some sectors - manufacturing and construction - stopped unnecessarily causing spillovers to other sectors and the fall in GDP to be larger than it needed to be.
Exploitation Route The funding has contributed to the development of a new sectoral approach to modelling the UK economy. The methodology that has been developed will be useful to others who go down this route. The model has been incorporated within the National Institute's modelling software and will shortly be made available to model subscribers in government and the private sector. This should improve the quality of analysis on how sectoral-specific developments are propagated throughout the UK economy.
Sectors Communities and Social Services/Policy,Education,Financial Services, and Management Consultancy,Government, Democracy and Justice,Manufacturing, including Industrial Biotechology

Description The findings have been discussed extensively with government economists and have been reported in the national press. The work formed part of the evidence base which informed decisions on reopening the economy after the first lockdown.
First Year Of Impact 2020
Sector Government, Democracy and Justice
Impact Types Policy & public services

Description Modelling of different strategies for easing lockdown in May and June 2020
Geographic Reach National 
Policy Influence Type Implementation circular/rapid advice/letter to e.g. Ministry of Health
Impact Provided advice to UK government on different strategies for easing first lockdown. These were modelled to have different economic impacts.