Young hit hardest by lockdown, want tax cuts
The Adam Smith Institute commissioned Survation between 15th - 16th April 2020 to undertake a nationally representative online poll of 1,001 UK adults (margin of error +-3.1%) to investigate the financial impact of the lockdown, views on developing an economic recovery and lockdown exit plan, and tax policy after the lockdown. Five questions relating to the economy and people's personal finances during the lockdown were asked:
During the COVID-19 crisis, the UK government has issued a lockdown which has reduced business activity. To what extent, if at all, are you concerned about the impact of the lockdown on the economy?
Which of the following statements applies to you?
Which of the following statements reflects your view?
To what extent would you support or oppose the UK government developing a plan to reboot the economy and exit the lockdown once medical authorities deem it safe to do so?
To what extent would you support or oppose the UK government reducing taxes after lockdown ends to try and increase economic growth and jobs?
Nine-in-ten (89%) of respondents said they were concerned about the economic impact, compared to just 1-in-10 (9%) who are not.
A growing number of people are feeling the financial impact of the lockdown. Younger cohorts are most affected than older ones. Londoners are more impacted than the rest of the country.
Two-in-five respondents (41%) expressed concern that the lockdown is having a negative personal impact, compared to just over half (52%) who stated that it is having no negative impact.
This reflects an increase over time when compared to other polls, indicating that the economic impact of the crisis is growing over time.
Seven-in-ten (70%) of those over-65 report that the lockdown is not having a negative impact on their finances. In contrast, half of those under the age of 54 (49%) are experiencing a negative financial impact of the lockdown.
There is broad, cross sectional public support for developing an economic recovery plan and lockdown exit plan once medical authorities deem it safe to do so — and there are concerns the Government is not doing enough to develop this plan.
Almost nine-in-ten respondents (86%) expressed support for developing an economic recovery and exit plan, compared to just 2% who disagreed. Conservative voters were the most likely to ‘strongly support’ an economic recovery and exit plan (61%), compared to under half of Labour and Liberal Democrat voters (47%).
More people believe that the UK government has not done enough (42%) to develop an economic recovery and exit plan compared to those who think the Government has done enough (34%). While previous polls have shown that the public is very supportive of the lockdown, this support appears to some extent to be conditional on a broad belief that there needs to be an exit plan to the lockdown.
There is popular support for reducing taxes after the lockdown to help boost the economy and jobs. Younger cohorts are the most supportive of tax cuts after the lockdown. Almost three-quarters of respondents (72%) think that the Government should reduce taxes after the lockdown to try to increase economic growth and jobs, while fewer than one-in-ten (8%) disagree with reducing taxes.
Of those aged 18-34, two-in-five (44%) “strongly support” lower taxes after the lockdown, compared to just one-third (33%) of those over the age of 65.
These results present the need for greater involvement of economic expertise in the Government’s decision making.
The Government should take action to ensure economic expertise is at the forefront of analysis in the same way as scientific analysis as the next steps are planned, the think tank argues and recommends an Economic Advisory Group for Emergencies (EAGE) is set up to advise on the withdrawal of the lockdown and appropriate measures to reboot the economy. This should operate in a similar fashion, with a similar level of regard and in tandem, to the Scientific Advisory Group for Emergencies (SAGE).
The think tank recommends that the EAGE could include monetary policy specialists like the former Bank of England Governor Mervyn King, economists like Paul Ormerod whose work has focused on systemic failure in the economy, or regulatory policy experts like Oxford professor George Yarrow.
The Adam Smith Institute argues that these results show that the public, which has broadly supported the lockdown for clinical reasons, nevertheless is concerned about the economic impact, has growing concerns about their personal financial impact, would love to see a plan developed to reboot the economy and exit the lockdown as when is clinically possible.
Economically the impact of the crisis so far has been borne by the young and the private sector, the think tank argues that the results of this polling suggest that groups recognise it is the private sector that will need to be stimulated and are supportive of tax cuts to boost supportive of tax cuts to boost growth and jobs at the conclusion of the lockdown.
Matt Kilcoyne, Deputy Director of the Adam Smith Institute, said:
"People know that our lockdown is having a huge impact on our economy. They are facing increasing financial hardship, with the young particularly feeling the brunt. And they want an economic recovery and exit plan that includes tax cuts.
"An economic recession seems a certainty, but a depression is avoidable if we develop a plan to get the economy growing again at the end of this lockdown. We need to reduce the cost of business face and the burden of taxation."