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Why economic crash could cost more lives than coronavirus

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Experts are predicted a global downturn ‘at least as bad’ as the 2008 crisis - and possibly worse

In Depth Gabriel Power
Wednesday, March 25, 2020 - 12:44pm

Coronavirus lockdown measures implemented in the UK may trigger an economic downturn that could kill more people than the virus itself, a new study warns.

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Philip Thomas, a professor of risk management at Bristol University, says that a fall in GDP of more than 6.4% could lead to a devastating recession in which “more years of life will be lost... than will be saved through beating the virus”, reports The Times.

In an academic paper published before peer review, Thomas argues that Boris Johnson’s sweeping social distancing rules may “do more harm than good” unless the UK economy is kept afloat over the next year, adding: “I’m worried that in order to solve one problem we’d create a bigger problem.”

The bleak prediction comes as Chris Williamson, chief business economist at global information provider IHS Markit, warns that “a recession of a scale we have not seen in modern history is looking increasingly likely”.

Are we heading for a recession?

The global economy is straining under the weight of the coronavirus pandemic, with some of the world’s richest nations enacting unprecedented economic stimulus programmes in a bid to fend off a potential recession

In an article for The Guardian, US economist Nouriel Roubini says that the “shock to the global economy from Covid-19 has been faster and more severe than the 2008 global financial crisis and even the Great Depression”.

“In those two previous episodes, stock markets collapsed by 50% or more, credit markets froze up, massive bankruptcies followed, unemployment rates soared above 10% and GDP contracted at an annualised rate of 10% or more,” he continues.

“But all of this took around three years to play out. In the current crisis, similarly dire macroeconomic and financial outcomes have materialised in three weeks.”

Why might a crash lead to deaths?

Experts are predicting that the economic downturn resulting from the coronavirus outbreak will probably be “at least as bad” as the 2008 global financial crisis - “and possibly worse”, says Sky News.

And as The Times notes, there is a “clear link between GDP and life expectancy, in part due to richer countries being able to spend more on healthcare, safety and environmental regulations”.

As such, it is possible to calculate roughly the effect of increased, or decreased, wealth on the health of a population.

A 2016 study outlined in a paper in the Lancet medical journal found that the 2008 crash may have caused an additional 500,000 cancer deaths worldwide in the two years to 2010, with patients “locked out of treatment because of unemployment and healthcare cuts”, according to The Telegraph.

The figures were extrapolated from an observed rise in cancer deaths for every percentage increase in unemployment, and every drop in public healthcare spending.

This week, similar warnings about the potential effects of the current financial situation were made by Steve Hilton, who served as then-PM David Cameron’s director of strategy from 2010 to 2012.

The New Statesman says that Hilton was “one of the architects of austerity” in the wake of the 2008 economic crisis.

Yet in an article published on the Fox News website on Tuesday, Hilton cites a 2019 report by the Institute for Public Policy Research, a London-based left-wing think tank, that said at least 130,000 people in the UK had died as a result of such austerity measures in the 2010s. 

“You know, that famous phrase? ‘The cure is worse than the disease,’ Hilton writes. ”That is exactly the territory we are hurtling towards.

“You think it is just the coronavirus that kills people? This total economic shutdown will kill people.”

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