Beware unintended consequences of restrictions to the economy

As infections from the Omicron variant continue to rise, the CBI is urging the Government to build on Sunday’s message to the nation on the booster vaccine by doubling down on other confidence boosting measures – promoting mask wearing and daily testing - to ensure the UK doesn’t oscillate towards ‘lockdown by stealth’.

Tony Danker, CBI Director-General, also raises growing concerns among businesses that while Working From Home (WFH) advice is the right action to take at this point, it should end immediately when deemed safe to do so. He says we must be ‘clear that working from home is a temporary measure, while evidence on the Omicron impact is established.’

On what needs to happen in the coming weeks, Tony says:

“The economy should remain as open as is feasibly safe to do so in the coming weeks. The bar should be high when it comes to any new restrictions on economic activity beyond Plan B. More effort must go into promoting actions that can build confidence and protect public health, like daily contact testing and mask wearing.

“The Government rightly must act when new data comes to light. But we are concerned that the rhetoric from some in Government risks instilling a lockdown mentality when in actual fact the proposed measures are far short of that.

“The result is a double whammy to firms who see demand fall without any commensurate support. We must beware unintended consequences to the economy from new restrictions.

“Government must make clearer what is aiming for in terms of economic activity and how it will enable that to happen. It should make communications clear and forewarned or else face the current risk of confusion and anxiety.

“With evidence of significant community transmission, the Government must also urgently review current restrictions at the border, acknowledging the limited efficacy of these measures and their significant impact on demand.

“The Government is right to urgently promote booster jabs and we urge all firms to promote uptake with staff.

On WFH guidance, Tony says:

“With infections spreading rapidly, the Government is right to advise that those who can, WFH. But that should be reversed as soon as it is safe to do so.

“Hybrid and flexible working bring many benefits but having WFH as a go-to Covid secure measure brings significant economic cost with it.

“Some economic activity is displaced to local areas, but it also leaves our town and city centres under real strain for retailers and hospitality. WFH in practice meaningfully restricts trade for some businesses and impacts mental health too.

“With the push for a booster rollout by the end of the year, the Government should use the 5^th January review to identify a new regime drawing on testing, covid secure workplaces and antivirals, to outline its intention for ending the push to work from home.

On Government support, Tony says:

“The Government’s backing of business throughout the crisis has been second-to-none and some of that support continues to help firms through.

“The international travel sector remains under severe stress, while shops, pubs, restaurants and leisure businesses – among others - face losing vital trade at the most important time of year for them. Those in the supply chains to these and other industries are equally challenged.

“With Plan B coming in, the net effect is that demand in some sectors will be supressed. Those sectors hardest hit must be closely monitored as further targeted support may yet be needed. Cashflow will clearly be an issue for some firms in the next few weeks and so the Government must consider now how best to support them.”