The Real-Time Economic Effects of Covid-19 in the United Kingdom

Lead Research Organisation: London School of Economics & Pol Sci
Department Name: Centre for Economic Performance

Abstract

This project will examine the microeconomic impacts of the Covid pandemic and lockdown on UK businesses and its interaction with the UK's decision to leave the European Union.

The project will deliver two key outputs, which are fundamental to designing and monitoring appropriate policies to mitigate the negative economic impacts of Covid. A first key output will be to provide real-time monthly summaries of the impacts of Covid on UK businesses and their expectations of business and employment outcomes for the coming months. This will use confidential information from firm-level surveys conducted by the Confederation of Business Industry (CBI), made available to us through a special agreement between CBI and the Centre for Economic Performance. The data are unique in providing rich, real-time, firm-level information on current trends and expectations. The surveyed firms have a broad coverage of sectors and regions and our previous work shows that they can deliver nationally representative economic analysis. Supplementing CBI survey data with firm and industry characteristics from ONS and company accounts, a second key output of the project will examine the channels through which businesses are being affected by Covid, such as demand, supply chains, and finance, and the interaction (if any) between these impacts and the effects of Brexit.

The project will identify the heterogeneity of impacts by firm-size, sector, and region, and the evolution of business activity as the economy recovers and the UK leaves the EU. The granular findings will help design detailed policy responses.

Publications

10 25 50
 
Description The project has been successful in providing real-time updates on the UK economy. The research has focused on publishing output following and in anticipation of key events relating to Covid-19 and, in particular, Brexit.

A key contribution of the research was to establish which sectors have been most affected by Brexit and how these relate to the short and long term impacts of Brexit. This includes publishing a detailed sectoral breakdown of the effects of each phenomenon on the UK economy. We also document how the impacts of Covid have affected firms of different sizes and provide detailed discussion of the effects in relation to policy instruments used by the government.

Throughout the project, we have focused the analysis on the unique aspects of the CBI business survey data which provide a unique window into issues facing UK businesses. For example, we make use of information on the factors that affected businesses' ability to prepare for Brexit, including Covid-19, preparation time, managing their supply chains and financing.

The project has also been prescriptive on policy responded to interests of policymakers. Based on discussions with policymakers in the Department for Education, we used the data to analyse recent trends in employer-provided training and make suggestions for policies in this area.

One objective in the stated deliverables that was not met was the study of how the effects varied geographically. In this case, the reason that we decided not to publish the analysis is that the regional dimension of the data turned out to be not accurate enough for any meaningful analysis.

The main focus of attention in the coming months will be to utilise new periods of data to document the effects of the end of the Brexit Transition Period in combination with changes in Covid policy. We are currently working on a new report which documents these trends and provides an industrial breakdown of the specific factors relating to Brexit that are causing issues to firms. We will then turn in more detail to the mechanisms through which Covid and Brexit are influencing the UK economy. Finally, we expect that additional survey periods would likely give us the statistical power to also look at the regional dimension.
Exploitation Route The project is ongoing and we would appreciate dissemination support as usual from UKRI. We expect to release a new report in a few weeks which would benefit from UKRI's wide network for dissemination. We hope to continue to be in touch with Tilly Gamble at UKRI, who has been very supportive on this front.
Sectors Communities and Social Services/Policy,Creative Economy,Government, Democracy and Justice,Retail,Transport

 
Description A key aspect of the project is to disseminate findings in real time. As such, we have published research findings in established high-impact blog platforms. Usually, the research has been cross posted on multiple outlets to maximise impact. One the most notable successes of the project has been the engagement from the media. Most of the analysis was widely picked up by the domestic and international media and the project investigators have taken an active role in responding to media queries. As an example, the Guardian article covering our early research was viewed over half a million times. The team was active in disseminating findings to policymakers. For example, the PI has presented the insights from the real-time updates at the HMT, FCDO and APPG for Textiles and Fashion on Retail. The PI was also on the Economic Recovery Taskforce on Investment for BEIS.
First Year Of Impact 2020
Sector Communities and Social Services/Policy,Creative Economy,Government, Democracy and Justice,Manufacturing, including Industrial Biotechology,Retail,Transport
Impact Types Societal,Economic,Policy & public services

 
Description Press Release for the CEP Report 
Form Of Engagement Activity A press release, press conference or response to a media enquiry/interview
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Media (as a channel to the public)
Results and Impact The Centre for Economic Performance published a press release to publicise our report on the sectoral impacts of Covid and Brexit in July 2020. The research was subsequently cited in at least 10 news outlets.

The research was covered in The Guardian, where it received over half a million online views. The newspaper let us know that this is unusually high.
Year(s) Of Engagement Activity 2020
 
Description Radio Interview 
Form Of Engagement Activity A broadcast e.g. TV/radio/film/podcast (other than news/press)
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Public/other audiences
Results and Impact Swati Dhingra interviewed for BBC Radio 4 to discuss the research findings of the project on businesses' preparation for Brexit
Year(s) Of Engagement Activity 2020
 
Description Radio Interview 
Form Of Engagement Activity A broadcast e.g. TV/radio/film/podcast (other than news/press)
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Public/other audiences
Results and Impact Swati Dhingra was interviewed on LBC on 7th December 2020 to discuss the project's findings that businesses are relatively unprepared for Brexit.
Year(s) Of Engagement Activity 2020
 
Description Research Policy Blog 
Form Of Engagement Activity Engagement focused website, blog or social media channel
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Public/other audiences
Results and Impact The blog provides analysis of the real-time effects of Covid and their relation to the effects of Brexit at the sectoral level. VoxEU is an international outlet for "research-based policy analysis and commentary by leading economists" and in April 2020 it had 1.6 million page views.
Year(s) Of Engagement Activity 2020
URL https://voxeu.org/article/covid-19-and-brexit-contrasting-sectoral-impacts-uk
 
Description Research Policy Blog 
Form Of Engagement Activity Engagement focused website, blog or social media channel
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Public/other audiences
Results and Impact The article presents a discussion of the importance of employer-provided training as a response to the Covid-19 pandemic. It provides new evidence that most firms have reduced their expenditure on training since the onset of the pandemic. It is published on the Institute for the Future of Work website and was widely circulated by the Think Tank.

The article was also published in the LSE Business Review.
Year(s) Of Engagement Activity 2020
URL https://www.ifow.org/news-articles/the-importance-of-worker-training-in-post-covid-19-recovery
 
Description Research Policy Blog 
Form Of Engagement Activity Engagement focused website, blog or social media channel
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Public/other audiences
Results and Impact This article, published on LSE Brexit Blog, examines the effect of Covid-19 on businesses ability to prepare for Brexit in the UK. The research was covered in the Guardian, Yahoo News, Times Radio, CNN and LA Times.
Year(s) Of Engagement Activity 2020
URL https://blogs.lse.ac.uk/brexit/2020/12/07/covid-19-has-disrupted-businesses-ability-to-prepare-for-b...
 
Description Response to media enquiry 
Form Of Engagement Activity A press release, press conference or response to a media enquiry/interview
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Public/other audiences
Results and Impact Josh De Lyon provided a written interview to London-based news wire AFP on the effects of Covid-19 and Brexit on the UK economy. The interview was further covered by MSN News and Gestion.
Year(s) Of Engagement Activity 2020