Hello. It looks like you’re using an ad blocker that may prevent our website from working properly. To receive the best Tortoise experience possible, please make sure any blockers are switched off and refresh the page.

If you have any questions or need help, let us know at memberhelp@tortoisemedia.com

Friday 15 May 2020

Coping with Covid-19

Corona shock: Week IV

No signs of cracks in the lockdown

By Chris Cook and Chris Newell

As Britain braces itself for a staged return to normality, its finance ministry has quietly been rolling out processes that envisage the economy being on life support for months to come. It has plans to keep the help flowing until October, at least.

It is hard to estimate how severe the damage will be by that point: new official data, out this week, suggests national output may have dropped by 5.8 per cent in the month of March – an alarming number given that the lockdown was not announced until the 23rd of that month.

The official numbers are consistent with findings from the Tortoise Corona Shock tracker, now in its fourth week: the latest data covers the week ending on April 27. The data, shared with Tortoise by SIB, a regeneration charity, shows the extremeness of the economic shutdown.

But count even small blessings. Our latest data shows weekly spending totals have been growing. Households have now bounced back from a dip in Easter week, and are well above it. In the last data week, there was a 10 per cent rise in grocery shopping, and a five per cent jump in the rest.

We should keep things in perspective. Things remain dire: since the beginning of March, spending is down by 28 per cent. This is also the end of the month: the timing of paychecks may have been led to a boost in spending by some cash-constrained households. Compared to the same week of last year, the grocery numbers are up by one-third – a huge lift. But that reflects, in part, that it was a curiously bad week last year.

For all the worry about lockdown fatigue, there is no sign of the lockdown weakening within our sample: about 10 per cent of sales are occurring within a one-mile radius of home – around the same level at which it has stood since the start. Normally, this figure stands at around 7 per cent.

There are also no signs of weakening lockdown in national spending patterns. After the initial thump, spending growth, week to week, has been astoundingly even and steady. We have a very steady national economic heartbeat because people who are obeying the rules have little chance to spend much more or less.

There is no sign of people travelling to retail hubs or scenic sites. where spending has resolutely stayed down. Compared to the same week last year, the heaviest losing areas this week remain small tourist towns, who saw none of their usual Easter seasonal bounce.

The biggest losses fell to Wadebridge, Penrith, Pwllheli-Porthmadog, Kingsbridge-Dartmouth and Penzance – all have seen sales drop by at least two-thirds compared to the same week of last year. There is a lake- and seaside crisis.

Last year, at this time of year, businesses in Penzance would expect only 11 per cent of sales to be with people living within one mile of the premises. This year, as tourists stayed away and trade shrivelled away, they made up 28 per cent.

Genevieve Maitland-Hudson, Director of Learning and Influence at SIB, said: “Coastal areas have a range of long-standing challenges that have been exacerbated not only by the pandemic, but by its timing. Looking at pre-existing vulnerability, our coastal towns are in dire need of sustained investment and planned support for the long term. C-19 is a tale of two impacts, one of exposure and health risk in cities, and one of economic damage in rural and coastal areas.” SIB has built a dashboard showing some of the interactions of the economic and social elements of the disease.

As the effects of the Easter holidays have fallen out of the sample, however, the county picture is a little more mixed. The education towns and cities are bearing more of the burden. Over Easter, Gwynedd and Cornwall – rural tourist areas – led the losses when you looked at a county level. No longer.

Oxfordshire – a county exposed to tourism and retail, but also education – has moved back into the heaviest-hit slot. It is down by 49 per cent. The area around Oxford itself is down by 52 per cent. East Sussex is the second placed county. Brighton, its largest urban area, is the single hardest hit mid-sized town or city in England and Wales – off by 55 per cent compared to last year. Big cities have proved a little more robust. But the pattern of student-linked losses continues: among the biggest cities, Sheffield and Bristol remain hardest hit – down by 38 and 31 per cent.

Overall, the picture we are building up is one of gentle improvement since an initial shock. But also uniformity. We are all staying local. The weekly rises and falls are largely in sync. That, of course, means places reliant on seasonal visitors, be they shoppers, students or sun-seekers, are the hardest hit. And places with large online presences or a big domestic population to draw on are doing better.

If things continue as they are until October, these different sorts of towns will suffer very differently: Easter was a small taster of the crisis we might see in the summer months as resort towns and scenic villages are pulled apart. The coast may need more support than inland. The urban less than the rural. Policy will need to recognise that, for a holiday area, losing the summer is losing the year.

We will keep an eye on these figures, and keep returning to them. If these rising spending levels continue, that would be something worth watching. But we have other big questions about who is doing the spending. And who is not. Who is saving, or who is out of money? These are harder questions – and may take longer to chew over than a weekly update permits. But we will be back with better answers.

 

All our journalism is built to be shared. No walls here – as a member you have unlimited sharing