VACCINES AND UK PRODUCTIVITY Alex Zhong

VACCINES AND UK PRODUCTIVITY

Due to the outbreak of the pandemic since 2019, a steep recession has caused significant economic challenges. In order to tackle the root of the problems, the existence of the vaccines plays a key role.

To start with, the vaccines demonstrate the ability to provide a high degree of immunity from the Covid-19, which prevents rapid spread of the disease among the population. This reduces the absence of employee from work, as the governments will gradually lift the lockdown, for example, restaurants, Cinema and other sectors in service industry are allowed to reopen. The service industry accounts for nearly two thirds of the UK’s GDP, thus the ease of the restrictions in service industry boosts the circular of income in injection, which causes the UK to experience rapid recovery (7.25% economic growth in June) after nearly 66% of the population was given the first dose of the vaccines. Due to the increase in employee attendance, the production chain can operate more effectively. Hence, the total output produced can be maintained to a higher standard, creating higher productivity and efficiency, which increases the profits received by the firms. Therefore, the firms are likely to demand more labour in order to meet their increasing productivity.

On the other hand, the household spending, for example, the spending on holidays has increased as the consumer confidence has been stimulated by the positive vaccine news. It contributes to an increase in UK’s total aggregate demand.

However, it takes a long time to ease the social distancing restrictions across the country, so the economic uncertainties still exist. For example, according to the figure from the central bank, it indicates that 70% of people it surveyed are more willing to keep the money in savings, which suggests the economic activities are not as high as predicted. The consumers are still lack of expectation and confidence. Although the firms were expected to increase their productivity and potential demand for more labour. The UK’s unemployment rate is still predicted to rise to 7.8% later the year. A full economic recovery from the harm caused by the pandemic still looks some way off.