Levelling Down and the COVID-19 Lockdowns: Uneven Regional Recovery in UK Consumer Spending

Covid Economics 67: 24-52 (2021)

29 Pages Posted: 8 Mar 2021

See all articles by John Gathergood

John Gathergood

University of Nottingham - School of Economics

Fabian Gunzinger

University of Oxford - Department of Economics

Benedict Guttman-Kenney

University of Chicago - Booth School of Business

Edika Quispe-Torreblanca

University of Leeds Business School; University of Warwick - Warwick Business School; University of Oxford - Said Business School

Neil Stewart

University of Warwick - Warwick Business School

Date Written: February 4, 2021

Abstract

We show the recovery in consumer spending in the United Kingdom through the second half of 2020 is unevenly distributed across regions. We utilise Fable Data: a real-time source of consumption data that is a highly correlated, leading indicator of Bank of England and Office for National Statistics data. The UK’s recovery is heavily weighted towards the “home counties” around outer London and the South. We observe a stark contrast between strong online spending growth while offline spending contracts. The strongest recovery in spending is seen in online spending in the “commuter belt” areas in outer London and the surrounding localities and also in areas of high second home ownership, where working from home (including working from second homes) has significantly displaced the location of spending. Year-on-year spending growth in November 2020 in localities facing the UK’s new tighter “Tier 3” restrictions (mostly the midlands and northern areas) was 38.4% lower compared with areas facing the less restrictive “Tier 2” (mostly London and the South). These patterns had been further exacerbated during November 2020 when a second national lockdown was imposed. To prevent such COVID-19-driven regional inequalities from becoming persistent we propose governments introduce temporary, regionally-targeted interventions in 2021. The availability of real-time, regional data enables policymakers to efficiently decide when, where and how to implement such regional interventions and to be able to rapidly evaluate their effectiveness to consider whether to expand, modify or remove them.

Keywords: Consumption, Coronavirus, COVID-19, Household Finance, Lockdowns, Credit Cards, Regional Inequality

JEL Classification: D14, E21, E61, E65, G51, H12, H75, R1

Suggested Citation

Gathergood, John and Gunzinger, Fabian and Guttman-Kenney, Benedict and Quispe-Torreblanca, Edika and Stewart, Neil, Levelling Down and the COVID-19 Lockdowns: Uneven Regional Recovery in UK Consumer Spending (February 4, 2021). Covid Economics 67: 24-52 (2021), Available at SSRN: https://ssrn.com/abstract=3798679 or http://dx.doi.org/10.2139/ssrn.3798679

John Gathergood

University of Nottingham - School of Economics ( email )

Sir Clive Granger Building
University Park
Nottingham, NG7 2RD
United Kingdom

HOME PAGE: http://https://sites.google.com/site/gathergoodjohn/

Fabian Gunzinger

University of Oxford - Department of Economics ( email )

10 Manor Rd
Oxford, Oxfordshire OX1 3UQ
United Kingdom

Benedict Guttman-Kenney (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

HOME PAGE: http://www.benedictgk.com

Edika Quispe-Torreblanca

University of Leeds Business School ( email )

United Kingdom

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

University of Oxford - Said Business School

Park End Street
Oxford, OX1 1HP
Great Britain

Neil Stewart

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

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