Here we go again… just as the economy was getting back on its feet, along comes Omicron and more government restrictions to drag us back down.

It is often said that we should be willing to pay any economic price to control Covid. However, it is essential to take account of the potential costs, and not just any benefits, in assessing whether the case for new measures adds up.

The economic costs of the new restrictions depend on two things. First, there is the direct impact of the individual measures themselves. The new guidance on ‘working from home’ and the rollout of ‘vaccine passports’ will have a substantial impact on office-related activities and on the leisure and hospitality sectors.

Second, there is the broader impact on sentiment. Even if each new regulation in isolation is only a small change from where we are now, it’s the cumulative impacts and the direction of travel that really matter. This could have a chilling impact on consumer and business confidence, and on spending.

It is hard to put firm numbers on this, but someone has to. Judging by what happened last winter, the additional Covid restrictions could knock as much as 2 per cent off GDP – costing the UK economy at least £4 billion a month. The additional restrictions could also force the taxpayer to stump up billions more to prevent a new wave of bankruptcies and job losses.

This isn’t just about the economy, either. These economic costs would come on top of all the social costs and harms to people’s wellbeing and liberties.

Many reasonable people will still argue that these costs are worth it, to buy time for the NHS and for the vaccine booster programme. Even just thinking about the economics, it could make sense to take another hit in the short term to secure a stronger recovery in the longer term.

However, this judgement would require strong evidence that the new variant is more deadly, not just more transmissible. This is a particularly high bar to clear in the UK, where most experts agree that the population has now acquired a high degree of immunity due to past infections and from the vaccines already delivered.

So far, this evidence base is missing. At the very least, the government needs to be willing to review the new ‘Plan B’ restrictions sooner rather than later, as we learn more about the risks posed (or not posed) by Omicron.

Julian Jessop
Economics Fellow, Institute of Economic Affairs

iN THE MEDIA

During Wednesday's Downing Street press conference, the Prime Minister raised the prospect of mandatory vaccines for the public, calling for a “national conversation” about how to defend the country from future Covid threats.



In her column for The Spectator, IEA Director of Communications Annabel Denham argued that "publicly shaming the unvaccinated is anathema to the values of personal autonomy or individual responsibility".



Writing for Conservative Home, IEA Head of Media Emily Carver warned against following the authoritarian measures we're seeing on the continent, which include de facto lockdowns for the unvaccinated.



On Wednesday, Annabel appeared on Sky News The View to discuss Thursday's opinion pages. The panel focused on the fallout from the alleged Downing Street party as well as the government's decision to move to 'Plan B'.

Annabel also reviewed last Sunday's papers on BBC News with journalist Yasmin Alibhai-Brown. They discussed the latest on the Omicron variant and whether the asylum system is in need of an overhaul. You can catch up here.



Hot Air... Last week, the UK Climate Change Committee published a report on the outcome of COP26. 

Writing for The Telegraph, Annabel argued that the CCC is acting like "an eco-activist NGO", and that deference towards such bodies allows politicians to introduce costly or disruptive policies without taking full responsibility for their decisions - or full accountability if things go wrong.

The IEA recently published a critique of the Committee by Head of Regulatory Affairs Victoria Hewson, which you can read here.



And IEA Head of Education Dr Steve Davies took part in Times Radio's new Think Tank Thursday feature which showcases eye-catching ideas that will 'make people think'.

Steve put forward his bold idea to abolish compulsory school attendance. You can listen back here.

CALLING ALL STUDENTS!

Ahead of the Christmas break, we are delighted to announce our internship and summer school programme for 2022. 



A-Level / IB Economics Exam Revision Course... For the first time, we will be running an exam revision course from Tuesday 12th – Thursday 14th April.

Our week-long Internship Programme will also run as normal from Monday 4th – Friday 8th April. Applications for both programmes close on February 4th 2022.



Residential Summer School... In partnership with the Institute of International Monetary Research, the Vinson Centre, and the Initiative for African Free Trade and Prosperity, the IEA will host a residential summer school.

This programme is open to undergraduate students and will take place from 27th June to 8th July. It will have four streams: general economics, monetary theory, economic history, and trade and globalisation.

Sixth Form Future Thought Leaders’ Programme... You can also apply to attend a week-long programme for sixth formers which will take place from Monday 25th – Friday 29th July. The week will include lectures, discussions, and debates with expert economists. 

Summer School Internship... Last but not least, our summer school internship will start from Tuesday 2nd August – Friday 19th August. Interns will participate in lectures, seminars, debates, discussions, as well as workshops on professional and career development.

You can find out more about all of our internship programmes here, or email IEA Education, Outreach and Programmes Manager Brittany Davis at [email protected] with any questions.

A reminder that submissions are open for the IEA's Monetary Policy Essay Competition, which is run in partnership with the Vinson Centre and the Institute of International Monetary Research. This year’s question is: 'Does inflation matter? And will the current inflation upturn be transitory or not?' The deadline is Friday, January 21st 2022.

Entries are also still open for this year's Budget Challenge. Schools can enter teams of up to four students to put together a submission that will outline a budget with taxation and spending policy for the United Kingdom in the coming financial year. The deadline to submit is Friday, January 28th 2022.

With a little help from our friends.... 

As an educational charity, the work we do is entirely funded by donations. If you are able to help please click here or contact [email protected]. Thank you.

And why not get Amazon to donate too? 

All you have to do is to start shopping on https://smile.amazon.co.uk/ and pick the Institute of Economic Affairs Limited as your chosen charity. The IEA will then receive 0.5% of your spending on most items. Everything else remains the same (and at no additional cost to you).