Although it is still debatable whether Boris Johnson’s decision to sit through the Omicron wave with minimal restrictions was the right idea or not, specialist academics have revealed that it did have positive consequences for the UK economy.
They say that Omicron had modest effects on the UK economy in December 2022 and January 2022. Alongside this, any previous growth dips in the economy will rebound thereafter as restrictions are continually lifted, economists believe.
An economist and former Bank of England official, Tom Yates, answer the worries of the nation: “we might just escape without the NHS being overwhelmed, but it will be a close shave if we do”.
He also states that it was more luck than correct judgement in their decision to not increase restrictions against Omicron.
Flávio Toxvaerd, an economist at Cambridge University has emphasised the lack of transparency the government has provided regarding their thinking towards the new variant.
He says, “The prime minister recently talked at length about getting the balance between economic, social and health considerations just right, but has provided no supporting evidence or analysis to back up the policies, other than to assert that the balance is right”.
Flávio adds the fact that, while fewer restrictions seemed to work better in terms of its economic benefit, this method is also “fraught with risks”, and the economic benefits may be temporary if the number of cases rises to levels with which the NHS cannot cope.
His caution is also embraced by other economists who equally stress that forecasts this year, for the UK, are still dependent on the course of the pandemic and the intensity of future variants.
Fortunately, with the increasing amount of vaccinated people in the UK, economists believe that Omicron will be nothing more than “an annoying blip for the UK economy” by springtime this year — so not soon!
They say this is due to the health impacts of Omicron proving to be far less dangerous than originally thought.
Samuel Tombs, an economist at Pantheon Macroeconomics, states, “In the second quarter, the gross domestic product should be close to the level it would have reached, had the new variant not emerged”.
Data from the Bank Of England displayed a decrease in spending in December and January, which was around the time that Omicron started spreading in the UK.
However, as most people were still working and shopping online during this period, senior economists like Sanjay Raja at Deutsche Bank “expect this [effect] to be modest” in regards to the level of economic downturn.
Another impact of Omicron was the rise in the cost of living, which is expected to affect incomes in the coming months.
James Smith, a developed markets economist comments on this, stating "a sharp cost of living [...] will cap consumer spending growth in the coming quarters”.
Written by Jade Andrew
Research compiled Louis-Daniel Oloyede