How should we read the polls on the economy during the lockdown? While the main economic markers show the country heading into serious economic crisis, the polls show extraordinary relative calm. Why is this and what does it mean for policymakers?
Let’s start with the polling numbers. There are three important fundamentals to consider.
First, there’s a big gap between what people are saying about the national economy and what they’re saying about their own finances. As YouGov’s tracker of public opinion shows, public concerns about the economy have rocketed in the last few weeks, and the economy now trails only healthcare.
However, and admittedly this research is a little old now, an Ipsos-Mori poll suggests most people haven’t yet felt the force of the downturn – with relatively few having to dip into savings, for example.
There are a couple of other interesting numbers, which give additional colour to this fundamental point. YouGov polling shows that people are now feeling more “frustrated” than “stressed” during the lockdown, again suggesting we’re a long way from economic panic. (These sorts of polls – which probe feelings – aren’t to everyone’s taste, but as long as they’re sense-checked with other data, I think they’re a useful additional data point).
And another YouGov poll showed that large numbers of people think they could successfully work from home, as if office closures aren’t a major problem in themselves (childcare is obviously the productivity killer for many, of course).
The second fundamental, perhaps related to the first, is that while a clear majority would favour a National Government, people are solidly behind the Government. The Government’s approval ratings are very high. In times of crisis, there is often a shift to the government of the day, as people seemingly and briefly conflate “the Government” with “the nation”.
But approval ratings are also high because people can see the Government is – like all governments – struggling across many fronts with a pandemic that came unexpectedly and because of the action they have taken to protect people’s finances during the lockdown. As I wrote last time, the Government’s announcements on furloughing, above all, seem to have persuaded people that they’ll be OK financially. But, in turn, all this strongly suggests that economic problems are yet to bite seriously.
The third fundamental is that there looks to be an emerging gap between the public, most of whom will be in “mainstream” employment (on PAYE), and business owners. A British Chambers of Commerce survey (fieldwork 1-3 April) showed that 57 per cent of BCC members had three months or less cash in the bank to cover operating costs, and 37 per cent said that they were planning to furlough between 75 per cent and 100 per cent of their workforce over the following week.
The survey also showed that few of their members were successfully accessing Government loans. While this is not the same as measuring optimism, it at least suggests deep concern. (I haven’t yet seen reliable polling of the self-employed, specifically, but anecdotally it’s sky high).
Now let’s briefly look at the economic numbers. We know that more and more people are applying for Universal Credit; we suspect that unemployment is rising rapidly (we’ll know more in about ten days); we know, from the BCC survey and elsewhere, that businesses are furloughing more and struggling to access finance; and we hear that the Treasury is desperate to get the economy moving again soon because of the vast cost of the furlough scheme and plummeting tax revenues. What does all this mean for policymakers?
Probably that public opinion on the economy is a rapidly ticking timebomb. The mass of the PAYE public is relaxed because of the furlough scheme, which guarantees them a decent income, and relaxed too because the scheme has avoided large-scale redundancies.
But if their employers consider themselves to be heading for catastrophe, it suggests that the public will catch up before too long. This isn’t to say that it will cease to care about health; on the contrary, until infection and death rates start to fall significantly, this will likely remain people’s primary concern for the foreseeable future (and they won’t forgive a government that they perceive to have recklessly risked the health of the nation).
But if the economic downturn hits ordinary people – and if people start to see people return to work in neighbouring European countries – demands for some sort of flexibility by government will increase fast.
The Government therefore has to find a way of getting people back to work as fast as practicably possible. Opening schools again, as has been suggested, would be the simplest controlled big step they could take, while keeping other elements of the lockdown in place. Opening shops with restrictions around the numbers allowed in would also help, as would allowing SMEs who can enforce social distancing more easily to open. Whatever happens, they need to diffuse the ticking timebomb shortly.