Photo by Paul Fiedler
Written by Allison Libbe
Since the first week of January, the UK has been under strict new lockdown orders in an effort to curb the proliferation of the B.1.1.7, or British variant, of Covid-19. Between new lockdown orders and new economic restrictions – now that London and Brussels have come to an agreement on a Brexit – experts seemed to think only a few weeks ago that a double dip recession was inevitable. However, in light of how successful the UK’s vaccine rollout program has been, the future of the British economy now looks more optimistic.
The UK and EU finally reached an eleventh-hour Brexit agreement on Christmas Eve 2020. While the agreement did not alter the free movement of goods or impose restrictive quotas or tariffs, there are new regulatory measures in place on goods crossing between the UK and the EU.1 These new bureaucratic procedures have slowed down already strained supply chains. Massive gridlock in UK ports formed in December as international restrictions were implemented to slow the spread of the recently discovered British Covid variant. The new regulatory processes are doing little to alleviate this gridlock and are continuing to slow economic activity in general.2
Additionally, coming off of an already weaker than normal fourth quarter in 2020, lockdown restrictions have hindered domestic economic activity throughout January. November saw a massive dip in British output as the country faced its second lockdown, and the fear now is that there will be a similarly devastating dip while the nation is stuck in their third indefinite lockdown. Even though the number of new cases daily has fallen since December, it is still higher now than at any point in the first wave of the pandemic, and the prevalence of the more infectious UK variant does not bode well for containing the spread.3
A double dip recession occurs when GDP falls for two consecutive quarters, briefly improves, and then plunges again. The UK experienced its first dip in the first two quarters of 2020, with GDP falling dramatically in the spring. Short-lived but substantial growth took place during the summer as case numbers dropped across Europe and North America. This was, however, cut short by the second wave of the pandemic. A second dip would mean further job losses and more businesses shutting down before the economy has recovered from the first dip, making it even harder to recover later.
The UK’s economic forecast is not all doom and gloom, however. The UK is currently on track to meet their goal of vaccinating 15 million elderly people, healthcare workers, and high-risk individuals by mid-February. If their ambitious vaccine rollout plan is successful, a double dip recession could be avoided. Unlike the rest of Europe and the US, the British vaccination program has run like clockwork, avoiding the vaccine shortages and transport hold ups slowing down the process elsewhere. The UK already had the infrastructure needed in a mass vaccination campaign in place existing, which has been a limiting factor in many countries like the US. Additionally, unlike other European countries, the UK does not need to import the bulk of their vaccine supply since the AstraZeneca vaccine is being produced in Oxford.4
Additionally, the UK has embraced a first dose strategy, prioritizing the distribution of the first dose of the vaccine and waiting twelve weeks in between the administration of the first and second dose.5 In contrast, if you were to get vaccinated here through the University of Michigan, you would only wait about a month between doses. The first dose of the vaccine provides a base level of protection that the second dose fortifies. This base level is especially strong in the AstraZeneca vaccine. The first dose strategy prioritizes getting as many vaccines in as many arms as possible, even if full immunity is not reached as quickly for each person. The UK is the only country taking this approach so far.
This strategy is not without critics, of course. The British rollout plan is the brainchild of the Joint Committee on Vaccination and Immunization, which is composed of medical experts (not politicians), but the scientific community still has its doubts. There are concerns that delaying the administration of the second vaccine dose could create a breeding ground for a vaccine resistant strain of Covid-19.6 If the first dose strategy is successful, however, it would be a monumental achievement; herd immunity could be within grasp for the UK and a recovery could well be on the way. According to the Bank of England, “GDP is projected to recover rapidly towards pre-Covid levels over 2021, as the vaccination programme is assumed to lead to an easing of Covid-related restrictions and people’s health concerns.”7
While the rest of Europe will almost certainly face a double dip recession, the UK could potentially avoid it. Despite trade hold ups and new regulatory measures now that a Brexit deal is in place, the UK’s unique strategy of administering as many initial doses as possible and delaying secondary doses will likely spare the country the fate facing the rest of Europe. While there are still concerns as to the safety of the first dose plan, its success in the UK could lead to more countries adopting the strategy. The economic situation in Europe and the rest of the world is being helped only in fits and starts by rocky vaccine roll outs. If the UK’s first dose strategy is successful and can dig the British economy out of its slump, the implications would be huge, not just for the UK, but for the world.
References
- Matthias Matthijs, “What’s in the EU-UK Brexit Deal?,” Council on Foreign Relations, accessed January 31, 2021, https://www.cfr.org/in-brief/whats-eu-uk-brexit-deal.
2. Hanna Ziady and Julia Horowitz, “Analysis: Brexit Is Finally Done. It Will Leave the UK Poorer,” CNN Business, accessed January 31, 2021, https://www.cnn.com/2020/12/24/business/brexit-deal-economy/index.html.
3. Richard Partington, “Covid Cases Push UK Closer to Double-Dip Recession,” The Gaurdian, January 29, 2021, https://www.theguardian.com/business/2021/jan/29/covid-cases-push-uk-closer-to-double-dip-recession.
4. Sugden, Joanna. “Oxford-AstraZeneca’s Covid-19 Vaccine Helps U.K. Lead Race to Reach Nursing Homes.” Wall Street Journal, January 20, 2021, sec. World. https://www.wsj.com/articles/oxford-astrazenecas-covid-19-vaccine-helps-u-k-lead-race-to-reach-nursing-homes-11611138601.
5. Peter Yeung, “COVID: How Has the UK Managed to Master the Vaccine Roll-Out?,” accessed February 1, 2021, https://www.aljazeera.com/news/2021/1/25/whats-behind-the-uks-covid-vaccination-success.
6. Tim Harford, “Is ‘First Dose First’ the Right Vaccination Strategy?,” January 8, 2021, https://www.ft.com/content/915756b2-6f13-41fb-9491-a647817aa919.
7. Monetary Policy Committee, “Monetary Policy Report Frebruary 2021” (Bank of England, 2/21).