The pandemic’s economic impact on the UK is still being felt four years later. A new job retention scheme, introduced to protect workers during lockdown, has cost £70 billion, with public debt soaring to nearly 110% of GDP. Economists say the government’s response accelerated a demographic shift, and that the large-scale interventions during Covid created an expectation for the government to step in when something unexpected happens.
The Coronavirus Job Retention Scheme, announced by Chancellor Rishi Sunak in March 2020, marked a radical shift in the role of the state, as the government intervened heavily to support businesses and workers. However, many of these measures have not been sustained beyond the pandemic. The £20 weekly uplift in universal credit, introduced during the crisis, was scrapped in autumn 2021.
Economists argue that the large-scale interventions during Covid created an expectation for the government to step in when something unexpected happens. “The government is now seen as the insurer of last resort,” says Leunig. This shift in public expectations has had a lasting impact on the way people perceive the role of government in addressing social and economic challenges.
The pandemic also accelerated a demographic shift, with many working-age adults experiencing symptoms of long Covid, which may be contributing to the surge in unemployment. Mental health experts warn that the prevalence of mental health conditions has increased, with 3,700 more “deaths of despair” recorded among working-age individuals in 2023.
Despite efforts to reform social care and tackle deep-seated challenges exposed by the pandemic, progress remains slow. The Labour government has opted to commission a review on social care, while the Conservative party continues to work on patching up the public finances. As economists warn that the UK’s debt crisis is far from over, it remains to be seen whether the government will be able to sustain its response and create lasting change.
Source: https://www.theguardian.com/uk-news/2025/mar/20/how-covid-changed-the-british-state