Clues of Virus Impact Seen in U.K.’s Three-Day Week in 1970s
Clues of Virus Impact Seen in U.K.’s Three-Day Week in 1970s
(Bloomberg) --
The U.K.’s experience in the 1970s is giving one JPMorgan economist a model for the impact of the coronavirus.
With the pandemic leading to temporary closures of businesses and restrictions on movement across Europe, Malcolm Barr looked for parallels in Britain’s three-day week in 1974.
The nation rationed the use of electricity in response to a strike, meaning companies could only use power for a maximum of three consecutive days in each week. Television broadcasts were also shutdown at 10:30 p.m. to discourage energy use, most pubs were closed and any non-essential travel was discouraged.
That led to a 2.7% drop in economic output in the first three months of the year, the largest quarterly decline in the series extending back to 1955.
“There are obviously a lot of differences between circumstances then and now, and we would not to claim that there is a lot of science in how one attempts to quantify what will happen this time around,” Barr said.
Yet depending on how long coronavirus restrictions last, “we might be in the right ballpark,” he said.
His forecasts show the downturn in western Europe bottoming out in April, down about 4% from January’s level of activity.
To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Brian Swint, Lucy Meakin
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