Economic Impact of Covid 19

In this article, you will learn the economic impact of Covid 19, especially on poverty levels.

We know of course that older people or those with underlying health conditions have been most at risk of infection. However, people in precarious, low-paid jobs in the caring, retail, and service sectors have faced greater exposure owing to the fact that their jobs can’t be done from home. On top of this, poor quality, smaller, cramped housing, and a lack of open space in inner-city areas have not only increased this risk but brought with it higher levels of anxiety and mental ill-health.

The link between poverty and the pandemic reinforces itself. Poorer people are more likely to have pre-existing health conditions and work in settings where they have increased exposure to infection. The impacts are also more substantial; an interruption to income has a bigger impact if a person has no savings. It is worth remembering that housing costs, bills, and groceries don’t stop when work is interrupted.

A project hosted at the University of York has been charting what it calls ‘Covid Realities’ and it notes that

‘families on low incomes are adept at managing on a limited budget, often finding creative, if time-intensive, ways to get by. When the pandemic hit, however, many of these strategies for navigating life on a low income became difficult, if not impossible, to sustain. At the same time, school closures, social distancing and other Covid-related disruptions have led to increased core costs for many families’.

Not only are those who are poorer more at risk of Covid, but Covid has also made them poorer. In particular, having children at home has led to higher spending on food, energy bills, internet bills, and entertainment. Food prices have increased and public transport to cheaper supermarkets has not always been possible. Perhaps more importantly, the ban on the mixing of households has meant that a lot of the informal care support that low-income families rely on hasn’t been available. All of this has driven up costs at a time when many have seen their incomes reduce as a consequence of shorter working hours or even job losses.

This has, quite simply, led to poorer people. In fact, while estimates vary, it is thought that some 700,000 people in the UK, including 120,000 children, have fallen into poverty as a result of the pandemic. This includes significant increases in poverty amongst families that were working prior to the Covid-19 crisis. These have resulted from job losses and earnings reductions

Beyond the UK it is thought that the COVID-19 pandemic pushed an additional 88 million to 115 million people into extreme poverty in 2020, with the total expected to reach as many as 150 million by the end of 2021 (World Bank, 2020). This has seen the first increase in extreme poverty for twenty years. While this has already started to fall as the world recovers, it will be some time before extreme poverty comes back to the pre-pandemic level.

The Covid Realities project can be found here: https://covidrealities.org/.

The World Bank can be found here: https://www.worldbank.org/en/home