Economic impact of covid-19 lockdowns

Summary

The pandemic caused a severe recession, with an unprecedented drop in GDP during the first national lockdown in 2020. As businesses and consumers adapted, subsequent lockdowns in autumn 2020 and winter 2020/21 did not lead to as severe a decline in economic activity.

Numerous policies were introduced by the government and the Bank of England in order to support businesses and workers and mitigate at least some of the negative economic impacts from the pandemic and lockdowns.

These measures were designed to keep businesses afloat and as many people as possible employed. The measures financially supported businesses, workers and the wider public during the pandemic, as well as attempting to reduce economic uncertainty.

Many of the costs of the pandemic were associated with reduced economic activity, but we also cannot estimate precisely how much of this reduction was caused by the lockdowns and how much would have been caused anyway by people voluntarily reducing their social contact.[1]

The Library briefing papers Coronavirus: Economic impact (published December 2021), Public spending during the Covid-19 pandemic (March 2022) and Coronavirus: Impact on the labour market (August 2022) contain more detail.

[1] For example, see IMF, COVID’s Impact in Real Time: Finding Balance Amid the Crisis, Oct 2020