What price lockdown?
Tim Knox and Jim McConalogue, December 2020
As the UK government publishes its cost-benefit analysis of lockdown, Tim Knox and Jim McConalogue attempt to quantify the estimated costs that have been incurred in a new Working Paper, The cost of the cure.
Their estimates can be used as a benchmark against which the government analysis can be measured.
They find that the cost per year of life saved (QALY) ranges from nearly three times more than what the NHS is usually prepared to pay to over 80 times more.
Sector by sector, the Working Paper identifies economic black holes of:
- over £70 billion for manufacturers;
- £40 billion for the construction industry;
- £35 billion for retailers;
- £69 billion for small businesses;
- £30 billion for hotels and restaurants;
- £42 billion for airline-enabled international travel costs;
- £7 billion for pubs;
- £21 billion for rail transport;
- £22 billion for car production and;
- £29 billion for the arts and entertainment industries.
Other costs include:
- Public sector net debt is expected to increase by £473 billion in 2020-21;
- GDP has fallen by 11.3% in 2020;
- Unemployment is expected to increase by between 450,000 and 2.45 million above pre-pandemic levels;
- 20,000 loss of lives could be lost from delayed treatment for cancer and other diseases;
- 16,900 additional domestic violence cases (on 2019) were recorded between March and June 2020;
- Significant increases in depression (64% recording common depressive symptoms), anxiety (69% report increases) and loneliness (reports of loneliness parents of under-fives up by 1.4 million)
- Significant increases in substance abuse including high-risk drinking among adults up by 3.7 million, 20% increase in opiate addictions, 39% increase in number of relapses among addicts;
- A 25% to 30% reduction in learning among primary and secondary pupils, respectively.
The authors accept the limits of their analysis:
‘…many of these estimates rely on certain counterfactual assumptions which are by their nature unprovable. In all cases, the assumptions and estimates have been set out; and in all cases these assumptions and estimates have been cautious.’
But this makes it all the more important that the UK government publishes its forecasts of the financial, economic and wider impact of the measures it has and is taking. These forecasts can then be assessed and scrutinised by Parliament, by future inquiries and by the wider public.
This Working Paper is subject to ongoing revision. Any feedback or criticism are welcome.Download PDF