UK public health policy is driven by a perceived need to balance health and economic concerns. This view is difficult to reconcile with the available evidence. The resulting strategy is myopic, and has not performed well during the pandemic.
The UK public policy response to the Covid-19 pandemic has not been conspicuously successful. Among OECD countries, the UK has experienced one of the highest death rates, and also one of the largest falls in national income. There have been some spectacular policy blunders – for example, moving elderly patients into care homes, the subsidy for dining out, and the protracted failure to develop anything resembling a world class test and trace system. We can hope that such errors will not be repeated. However, the rationale provided for the government’s alarming decision not to act on the recent advice of its own scientific experts, the Scientific Advisory Group for Emergencies (SAGE), suggests that there is a deeper flaw at the heart of government thinking.
It is now clear that UK public health policy is dominated by thinking inside the Treasury. Central to this thinking is the view that policy responses to the pandemic must balance a trade-off between public health objectives, protecting the vulnerable, and economic objectives, protecting businesses and jobs. The importance of this trade-off has been stressed repeatedly by the Chancellor of the Exchequer. This perceived need to balance health and economic concerns was echoed throughout the Prime Minister’s statements on 12 October, and was the explanation subsequently given by the Health Secretary for the government’s break with its previous mantra of “following the science”.
At first sight, this trade-off view may seem plausible. In the very short run, there is indeed a trade-off. Compared to doing nothing, if we close down half the economy for two weeks, we should see a reduction in the spread of the virus, but at the cost of lower production. But this is not the time horizon which should be determining public health policy choices. The government has offered no evidence to support the idea that there is tension between health and economic objectives over longer time horizons. There is a reason for that. Empirical evidence which is now available is strikingly inconsistent with the presence of such a trade-off.
The table below reports GDP growth rates for selected East Asian and European countries, comparing GDP in the second quarter of 2020 to the same quarter in the previous year. By international standards, the East Asian countries considered have all experienced very low death rates during the pandemic. The European countries are divided into those with relatively low and relatively high death rates, based mainly on the estimates of excess death rates reported by the Financial Times.
The pattern is clear. The countries whose economies have suffered the least during the pandemic are, very largely, the same countries where public health policies have succeeded in keeping death rates low. Prominent examples are South Korea, Taiwan and Vietnam. The same pattern can be seen within Europe, with countries like Norway, Finland, Denmark and Germany experiencing both lower death rates and smaller contractions in national income than countries like France, Italy, Spain and the UK.
Of course, there are some noteworthy exceptions. Health outcomes in Sweden have been poor compared to other countries in Scandinavia, but Sweden’s economy has fared similarly to those of its neighbours. Deaths in Japan during 2020 have been no higher than in previous years, but national income in Japan has fallen by almost 10 percent.
Still, the view that public policy responses to the pandemic should balance a meaningful trade-off between health and economic concerns is difficult to reconcile with this empirical evidence.
On the contrary, the relatively successful countries appear to be those, particularly in East Asia, where governments intervened quickly to limit unnecessary travel and social interactions, and got infection rates down to very low levels before relaxing those restrictions. It helped that those countries also implemented effective test, track, trace and isolate systems to then contain local outbreaks. This has allowed customer-facing businesses to trade, confidence to return, and economic activity to recover, at least in comparison to countries where infection rates have remained higher.
The problem with giving undue emphasis to the short-term trade-off between health and economic objectives is that this leads to myopic policy choices. It favours delaying hard decisions when infection rates are rising, and relaxing restrictions too soon when infection rates start to fall. We saw this in the UK response to the first wave of the pandemic. Sadly, the government appears determined to repeat the same mistakes in response to the second wave.
Indeed, in all likelihood, it has done so already. The scientific advice that the government rejected was issued by SAGE on 21 September. This advice was broadly in line with the early intervention strategy sketched above, which has been notably more successful, in relation to both health and economic objectives, in a number of other countries. Weeks later, the UK government is still worrying about the trade-off, and still procrastinating.
In my view, there is no basis for tension here between the scientific advice and the economic advice. Of course, there is never consensus among economists, but this is not a maverick position. The evidence on public policy responses to the Covid-19 crisis is considered in much more detail in the IMF’s latest World Economic Outlook. The IMF concludes, with characteristic caution, that “policymakers may want to lean toward rapidly adopting tight lockdowns when infections increase rather than rely on delayed mild measures”.
There are also advocates of a more laissez faire approach. If enough people have survived the virus, and they remain immune for a while, then the virus will find it harder to spread, and infection rates will naturally fall. Advocates of this ‘herd immunity’ approach must either explain how, in the real world, relatively mild infections among younger people can be stopped from doing serious harm to their more vulnerable contacts; or, as Joe Biden might say, how many older people they consider to be expendable.
Having broken cover from its own scientific advisors, the UK government is now in a very exposed position. The thinking inside government which is driving the public policy response to the resurgence of the virus appears to be flawed, and is certainly difficult to reconcile with the available evidence. The same strategy did not perform well in the first wave. Perhaps the government should explain which successful examples it is seeking to follow, in formulating its public policy response to the second wave of the pandemic.
GDP Growth Rates, 2020 Q2 (year-on-year, %)
Stephen R. Bond
Professor of Economics
Nuffield College, University of Oxford