As the 3rd wave of the coronavirus pandemic sweeps through the UK, the need for close contacts to self-isolate is becoming a significant economic issue.
Ten per cent of the labour force at Nissan's giant plant in Sunderland are self-isolating at the moment leading to cutbacks in production.
Similar issues are affecting thousands of shops and hospitality venues especially those with a younger workforce many of whom are not yet fully vaccinated. Some retailers have suffered staff absences of up to 30%.
Consider the impact of this on the UK economy's short run aggregate supply.
If the numbers of people legally required to self-isolate continues to surge, this will have a considerably impact on short-run production leading to a contraction in aggregate supply at a time when demand is picking up after the end of lockdown.
A good example of this are growing staff shortages at many of the UK's major ports.
This will dampen economic growth and perhaps lead to a further rise in cost-push inflationary pressures during the remainder of 2021.
© 2021 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.