Economics

In the News

The "pingdemic", self-isolation and short run aggregate supply

Geoff Riley

20th July 2021

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.

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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