The Treasury is worrying about economic long Covid

The government’s chief economic adviser discussed the consequences of the pandemic in a significant speech, writes John Rentoul

Economically inactive people can include those who have taken early retirement (PA)

Clare Lombardelli, the government’s chief economic adviser, came to King’s College London on Wednesday to give a speech about the effect of coronavirus on the economy. It offered an insight into Treasury thinking about the pandemic and its consequences.

Most of the speech was about the response to the unprecedented public health crisis, imbued with some pride in the Treasury’s speed and creativity, having little evidence to draw on but a strong assumption that the furlough scheme would protect the interests of millions of people on lower incomes against the temporary shock.

Most interesting to me, however, was the last part of the speech, in which Lombardelli outlined “two things to worry about”. One is the sharp rise in economic inactivity, as about half a million people have left the labour market. She said that this figure is primarily accounted for by people in their fifties and sixties, but is not confined to people taking “financially comfortable” early retirement. The rise in inactivity “is evident in most regions and across all education levels”, she said.