Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/306874 
Year of Publication: 
2020
Series/Report no.: 
CeMPA Working Paper Series No. CeMPA WP 5/20
Publisher: 
University of Essex, Centre for Microsimulation and Policy Analysis (CeMPA), Colchester
Abstract: 
We nowcast the economic effects of the Covid-19 pandemic and related lock-down measures in the UK and then analyse the distributional and budgetary effects of the estimated individual income shocks, distinguishing between the effects of automatic stabilisers and those of the emergency policy responses. Under conservative assumptions about the exit strategy and recovery phase, we predict that the rescue package will increase the cost of the crisis for the public budget by an additional £26 billion, totalling over £60 billion. However, it will allow to contain the reduction in the average household disposable income to 1 percentage point, and will reduce poverty rate by 1.1 percentage points (at a constant poverty line), with respect to the pre-Covid situation. We also show that this progressive effect is due to the increased generosity of Universal Credit, which accounts for only 20% of the cost of the rescue package.
Subjects: 
Finance
Public Policy
Economics
Welfare Benefits
Covid-19
Poverty
Health
Household Economics
Microsimulation
Income Dynamics
Labour Market
Document Type: 
Working Paper

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