The economic impact of the latest Covid restrictions

We don’t yet know whether the Omicron variant will drastically accelerate the spread of coronavirus, or whether it will circumvent parts of the immune system. Nor can we be sure that the ‘light’ coronavirus restrictions announced at the weekend will be enough to combat the new strain.

We can be certain, however, that these measures will come with an economic cost that politicians are, at least publicly, understating. Face masks are once again compulsory in shops and on public transport in England, and UK arrivals will need to take PCR tests within two days of landing, isolating until they get their result.

But the major economic threat stems from the tightening of self-isolation rules for contacts of those testing positive for Omicron (ten days, regardless of vaccination status) and the fear that this will trigger another ‘pingdemic’. The one in July probably shaved 0.5 per cent off GDP that month, and the impact now could be even greater, given it’s school term time and labour shortages are worsening.