Covid-19 Recovery Brief: Thursday, August 13

Each week, our Public Policy team will be reporting on the latest weekly news in the evolving situation. To view the previous week’s summary, please click here.

The UK economy shrank in the second quarter of 2020 by more than any other major advanced economy 

• Office for National Statistics (ONS) data re-leveled that UK GDP shrank 20.4% in Q2, the largest quarterly contraction in the UK economy since ONS quarterly records began in 1955.
  • The UK economy performed worse in Q2 than any other major advanced economy with USA shrinking 9.5%, France 13.8%, Italy 12.4%, Germany 10.1% and Spain 18.5%.
  • However when combining Q1 and Q2 results than the UK was the second worst performing economy shrinking by 22.1%, coming after Spain 22.7% but still worse than France 18.9% and Italy 17.1%.
  • Many economists believe that the reason the UK performed worse than most other major economies are threefold.
  • Firstly, compared to most of Europe, the UK was slower to lockdown, as a result the UK had to stay in lockdown longer in order to get control of the virus.
  • Secondly, because the UK arguably took longer to bring the virus under control, it affected public confidence, meaning the public were initially more hesitant to resume normal economic activity when the country began unlocking compared to their European counterparts.
  • Lastly the UK is very dependent on the services sector – which means a lot of work can’t be done from home. The sector, which includes restaurants, retail, entertainment and accommodation, ground to a halt during the strictest parts of lockdown.
  • However there were some signs of a recovery on a month-on-month basis, the economy grew by 8.7% in June, after growth of 1.8% in May.
  • Separately the ONS also re-leveled that there were 730,000 less employees on payrolls for July 2020 compared with March 2020. However the official unemployment figure remained steady at 3.9%.

The Government has announced a new “triple lock” for students who receive A Level and GCSE results this year to try and provide “added security”

• Students could accept their calculated grade, appeal to receive a valid mock result, or sit autumn exams to ensure the achievements of young people are recognised.
  • An extensive programme has also been announced for a full exam series in the autumn with £30m earmarked to deliver this support.
  • The Government will also make provision for enough places in universities and colleges this year to ensure that no one is crowded out of a place they would otherwise have been awarded.
  • The announcement came after the Scottish government apologised for the high proportion of downgraded grades awarded to Scottish pupils and announced that all downgraded grades for Scottish pupils will be withdrawn and grades will be reissued based solely on teacher or lecturer judgement.
  • Wales has also made changes by announcing that A-level grades this year will be no lower than those the pupils achieved at AS-level the previous year, while Northern Ireland’s exam board said there would be “no change”, although students can use mock exam results to appeal against their grade.

Other news

• The Treasury has published the latest statistics for the business loan scheme. They show that less than half of the total number of applications to the CBILS have been approved, totalling £13.41bn in loans. Meanwhile there have been 896 applications to the CLBILS, with 497 approved. This totals £3.4bn.
• Housing Secretary Robert Jenrick has announced Government grants to individual neighbourhood planning groups in both urban and deprived areas will increase to £18,000. Technical expertise will also be offered free of charge, such as assessing their area’s housing needs, or developing masterplans.
• 117 trusts will be allocated a share of £300m to upgrade A&E facilities. This funding could be used to expand waiting areas and increase the number of treatment cubicles or to increase the provision of same day emergency care and improve patient flow.
• 17 new R&D projects to boost local growth have been given early stage investment from UKRI’s Strength in Places Fund. These new consortia will receive up to £50k each to develop full stage bids. It will cover a wide range of sectors including healthcare, cyber security, construction and clean energy.
• The Scottish Government has announced a £10 million funding commitment for investing in the future workforce. The funding will be used for a range of measures to recruit and retain apprentices, including additional funding for the Scottish Government’s Adopt an Apprentice programme.
• Russia has approved the world’s first Covid-19 vaccine for use, however most scientists remain sceptical as it hasn’t undergone the standard Phase 3 trials which takes months, nor has Russia formally published any of the data on the vaccine’s safety and effectiveness.
• Scotland’s pupils have returned to school for the first time since lockdown began nearly five months ago. The Scottish Government has announced that teachers, nursery and school staff can now be tested for Covid-19 if they are concerned they have been at risk from infection, even if they have no symptoms.
• The Welsh Government has confirmed up to £50m to support projects across Wales to help people to stay in their homes and end homelessness.
• The Government announced that current rules on social gatherings will continue in Greater Manchester, Leicester, parts of West Yorkshire and East Lancashire. Restrictions on household gatherings were also brought in for Preston. Wider restrictions in Leicester, Blackburn and Bradford will also continue.
• The Scottish Government has announced that 30 food and drink businesses across Scotland have been awarded a share of £5 million to invest in infrastructure, purchase new equipment and upgrade or replace facilities.
• The Department for Health and Social Care has announced that NHS Test and Trace will provide local authorities with a dedicated team of contract tracers for local areas. Local and national teams will work as one to ensure that as many people as possible are reached by contact tracing.
• Bus services across England will receive up to £218.4 million of support over the next eight weeks to increase service levels, with rolling funding at up to £27.3 million per week afterwards, until a time when the funding is no longer needed. Tram services also have access to up to £37.4 million over 12 weeks, at a rate of up to £3.1 million a week, with funding to be reviewed at the end of the period.
• The Welsh Government have announced a £4m Childcare Provider Grant which will offer dedicated funding for the childcare sector to help ensure they reopen in September. The grant is available for childcare settings who have been unable to access other business support schemes offered by the UK and Welsh governments. Most providers will be eligible for a one-off grant of £2,500 to meet costs such as rent, utilities and unmet wages. Applications for the scheme will open on 24 August and the scheme will close on 31 October 2020.
• Scottish First Minister Nicola Sturgeon has announced that the local lockdown in Aberdeen will continue for a second week.
• London’s City Airport is pausing plans to expand after taking a hit from Covid-19. The £480m scheme will be halted at the end of the year because, it said, the return of passenger demand to pre-Covid-19 levels “will take longer than initially expected”.
• Travel firm Tui has seen a sharp jump in bookings for 2021 in the UK as customers make early plans for next year. It comes after the Anglo-German company posted a €1.1bn (£995m) loss for the three months to June as lockdown brought the travel industry to a halt.
• Debenhams is to axe another 2,500 jobs as the store struggles to cope with a fall in sales during the pandemic. The company has already cut 4,000 jobs since the start of lockdown, meaning its workforce is down by a third.
• Diners used the chancellor’s meal deal discount 10.5 million times in the first week of the “eat out to help out” scheme.
• An additional 150,000 free laptops will be provided to children who are shielding for health reasons or affected by local lockdowns when schools return next month.
• There were 2.4 million starts to Universal Credit between 13 March and 14 May and 5.6 million people on Universal Credit at 9 July, an increase of 2% from 11 June. There were around 42% of claimants were in the ‘Searching for work’ conditionality group, an increase of 6% since March 2020.