Over the past year, the UK economy has struggled with government pandemic restrictions. The next boom began on Monday when shops, outdoor restaurants, gyms and hairdressers reopened across England for the first time in months.
In London, friends gathered at tables outside a pub a minute after midnight to toast the reopening. Others queued at 7 a.m. in light cyclones to allow stores to open their doors. Hairdressers and beauty salons had long lines, and by lunchtime the outside tables in restaurants had filled up.
But the pandemic has left Britain with deep economic wounds that have shattered historic records: the worst recession in three centuries and record highs in government borrowing outside of war.
The reopening exposed the companies that did not survive the multiple closings and whose windows were finally boarded up. Some of the shuttered shops were once stylistic givers, such as the Topshop on Oxford Street, one of the busiest shopping streets in Europe. Many of the neighborhood restaurants are now dark, empty clams.
In March and April, as the coronavirus was rapidly spreading across the UK, there was an economic slump unprecedented as schools, workplaces and businesses abruptly shut down. Then a summer boom as restrictions eased and the government kicked people out of their homes with a popular food discount initiative called “Eat Out to Help Out”.
From the fall, a second wave of the pandemic halted the recovery, although the economic impact was not as severe as last spring. Still, the government is spending around £ 344 billion, or $ 471 billion, on its pandemic. To pay for that, she borrowed a record sum and is planning the first corporate tax hike since 1974 to bring the budget back into balance.
By the end of the year, the UK economy will be back to the size it was at the end of 2019, predicts the Bank of England. “The economy is on a spiral spring,” said Andy Haldane, chief economist at the central bank, in February. “When its energies are released, the one-year recovery should be remembered to be forgotten.”
April 12, 2021, 3:04 p.m. ET
Although many retail spending has shifted online, reopening store doors will make a big difference for many businesses. According to Springboard, pedestrian traffic in UK shopping malls was more than double what it was last week on Monday.
Daunt Books, a small chain of independent bookstores, had been preparing to reopen over the past week. Throughout the lockdown, a skeleton crew “worked harder than ever just to get a trickle” of revenue from online and phone orders, said Brett Wolstencroft, the bookseller’s manager.
“The worst moment for us was December,” said Wolstencroft when stores closed across much of the country on December 20th. The income of a day leading up to Christmas is the same as that of a week for the rest of the year. “Realizing that you are losing your last piece of Christmas is extraordinarily difficult.”
He has been looking forward to customers returning to browse the shelves and speak to staff. “We’ve kind of turned into a warehouse,” he said during the lockdown, “but that doesn’t work for a good bookstore.”
On Monday afternoon, Daunt’s flagship store in central London was full without being overcrowded. Children’s books have been particularly popular that day, said Wolstencroft. All business, including the one in the City of London, surrounded by largely empty office buildings, was doing better than expected, he said. The booksellers did what they did best again: make recommendations. A client looking for a novel about London for a German friend was quickly led to the corner where the books by British author Zadie Smith were.
The Office for Budget Responsibility estimates that the British are expected to save £ 180 billion by June as pubs, hairdressers, cinemas and hotels have been closed for months. That money is expected to be the engine of the recovery once people get more out of it – although economists are debating how much of it will end up in corporate coffers. Some only forecast 5 percent, saying that middle- and high-income households are more likely to cling to their savings.
The official unemployment rate in the UK has remained relatively low due to the government’s wage support initiative, which made up to 80 percent of workers’ salaries available when they were unable to work due to restrictions. At the last census, around six million people, or one fifth of the workforce, were on vacation.
Monday was just a phase of reopening. Pubs can only serve customers in outdoor seating areas, and fewer than half have such facilities. In addition to indoor restaurants, museums and theaters, the hotels will remain closed for at least another month. The next reopening phase is planned for May 17th.
Overall, two-fifths of hotel companies have outdoor spaces, said Kate Nicholls, the executive director of UK Hospitality, a retail group.
“Monday is a really positive start,” she said. “It will help us gradually reopen businesses, gradually withdraw employees from vacation and work towards the reopening of hospitality on May 17th.”