“When things get back to normal” was almost as common a phrase as “shall we Zoom?” in the early days of this pandemic. We’ve since been on a steep learning curve. Not a soul thinks that the thing missing in their life is another video conference, and our expectations have caught up with the reality that we’ll be living with the effects of Covid-19 for years to come.
In the economics sphere, this has seen confident predictions of immediate V-shaped recoveries give way to a focus on the damage that high, lasting unemployment might do. Ongoing social distancing will mean that many firms will be smaller or not viable until a vaccine turns up.
But the economic impact of this crisis will last even once a vaccine prevents Covid-19 doing fresh damage. New research argues that this is because, while no one started 2020 expecting a global pandemic, we’ll all now think another one is around the corner, just as everyone kept predicting another banking crisis after the financial crash.
The good news is that it will make us better prepared – countries affected by Sars in the 2000s have generally done better at suppressing this virus. But a more cautious world is not a good one economically. Researchers suggest that it will make us overestimate risks, leading to lower investment and a long-run economic hit of many times the immediate damage we’re living through. Covid-19, and its effects, are here to stay.
• Torsten Bell is chief executive of the Resolution Foundation. Read more at resolutionfoundation.org