Britain has become the first country to approve the mass rollout of a coronavirus vaccine that has passed large-scale clinical trials. This is a big moment. The pandemic is by no means over, but the launch of mass vaccinations marks the beginning of the end. The final lifting of restrictions placed on millions to halt the pandemic’s spread may now be in sight.
It also opens up the possibility of rapid economic growth. High savings rates and a return of economic confidence could combine with months of pent-up economic demand to lead to a new edition of the Roaring Twenties that followed the end of the first world war and the conquering of the Spanish flu. If coronavirus can be banished for good, millions may soon rush out to indulge themselves in all the ways in which they have recently been denied.
Such optimism could still turn out to be misplaced. Distribution of the vaccine, if it works, will not be smooth. Governments need to persuade millions of healthy, and often low-risk, people to accept a dose. The accelerated approval process means that its effects might not be fully understood; its efficacy, too, is uncertain. The Pfizer/BioNTech vaccine given emergency approval in the UK has not yet been approved by the US and the EU. A mass vaccination programme of this scale and speed has no precedent.
If the public health emergency can be brought under control, however, the overall economic recovery could be robust. Evidence from China and Australia, where the bounce back has outpaced expectations, suggests that once restrictions are relaxed and economic activity can resume then consumers start spending. Shoppers see the virus as transitory and confidence rebounds strongly; unlike in previous recessions, the housing market has remained stable, financial markets have already recovered, and parts of manufacturing have been relatively unscathed. The OECD, the rich country think-tank, has revised up its most recent forecasts for economic growth.
The economy that emerges out of the pandemic will look rather different. Not only have millions of businesses learnt how to manage the bulk of their staff working from home and invested in the equipment necessary but retail has moved rapidly online and digital laggards have been forced to embrace the opportunities offered by new technologies. Numerous other companies, by contrast, have closed their doors for good and many that remain now have to cope with much higher debt burdens — meaning slower hiring and less investment.
As the International Labour Organization warned on Wednesday, the pandemic has exacerbated inequality. Workers with stable, well-paid jobs have accumulated substantial savings; property prices have risen across Europe, partly as the wealthy seek more attractive locations for remote working. Others have suffered as their jobs have disappeared or hours have been cut back; a significant minority have been pushed into extreme financial hardship, having to borrow money to buy essentials.
After months of isolation and privation, the public will deserve an opportunity to let their hair down if the vaccination effort succeeds. In some quarters, the spring and summer of 2021 might then be remembered as much for a consumption and entertainment boom as 2020 was for social distancing. Memories of the crisis and the early sense of solidarity will, inevitably, fade. If they are to create a sustainable recovery worthy of the name, however, governments should remain vigilant — and keep in mind how the last Roaring Twenties came to an end.
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