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●   Moving to gphase two”: With virus trends improving, the UK will begin on 1 June to gradually lift the lockdown, which was originally introduced on 23 March. The UK government plans to reopen society and restart economic activity in stages, while adhering to some continued social-distancing practices to prevent a second wave of the virus that would require a return to full nationwide lockdown. The UK will remain in “phase two” until a medical solution becomes available, such as vaccine or effective treatment. At that point, life can begin to fully return to normal in “phase three”.

●   Massive costs: The damage from the COVID-19 pandemic is far reaching. It extends well beyond the high number of direct deaths and permanent health damage from the disease. The lockdown is leading to major negative health, social and economic consequences. As the costs of the lockdown and recession rise, the economy’s ability to serve the long-term needs of society diminishes while the risks increase.

●   Policy failures: The UK arguably could have suffered fewer deaths and less economic damage if it had reacted with suitably aggressive measures to contain the pandemic at an earlier stage. Data on COVID-19 deaths for England by age group suggest that the lockdown provided too little protection for the old and vulnerable who account for the vast majority of deaths. Looking forward, the UK should tailor its measures better to protect those most at risk.

●   Paying the price: Having reacted late to the first wave of the virus – and in the wake of a huge public outcry at the rising death toll – the UK was forced to introduce a severe lockdown to contain its spread. As case numbers are still rising faster than on the continent, the UK is now easing its lockdown later than major parts of Europe. This raises the already high economic and social costs and further damages the UK’s already weakened international reputation that was badly hurt by Brexit.

●   A better plan would involve a broader assessment of the costs of lockdowns and social distancing with a risk-based approach to reopening the economy that provides support to those that need it most. To minimise the economic and social costs, the easing of the lockdown should focus on those groups facing the least risk – the young and healthy. That may even enable the government to lift restrictions earlier on low-risk activities while maintaining them for potential super-spreading events and risks. A further increase in testing would help. In case of a major second wave, which we do not expect, the lockdown should be re-introduced on an age and risk basis, with more aggressive steps to protect the vulnerable and fewer restrictions on the healthy than in the first wave. The government should emphasise that it will not return to the harsh nationwide lockdown unless the pandemic were to worsen a lot.

Kallum Pickering

Senior Economist

+44 20 3465 2672

kallum.pickering@berenberg.com

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