Economic Recession, COVID-19 and Mental Health in Wales

Daniel Priestley- Writer

After the events of the last six months, indicators suggest that Wales is on course for a sudden and unexpected economic recession. Every area of the economy has been affected including massive reductions in spending, working hours, GDP and a rise in unemployment (Forrest et al., 2020). The full extent of the crisis is yet to be understood but current policy research should focus on how best to mitigate the impact on the people of Wales. This article examines the effect of the 2008 economic recession on the mental health of the population and places them in the context of the Welsh Government’s current strategy on mental health. 

The Economic Impact of COVID-19

On the 23rd of March 2020, Wales went into lockdown to prevent the spread of COVID-19. Schools, restaurants, camping sites, non-essential shops, bars, music venues, theatres, and workplaces across Wales were shut down and citizens were advised to stay home. 18% of workers in Wales are employed in sectors shut down during the pandemic (Hagendyk and Finneg, 2020). At the time of writing, we have now started to cautiously reopen many of these sectors but under strict rules to prevent a resurgence of the infection. This lockdown and the ongoing struggle against the virus presents “the most serious economic crisis of the devolved period of government in Wales” (Hagendyk and Finneg, 2020) with Wales’ Minister for Finance and Trefnydd warning of a “really, really, really, rough recession” (Hayward, 2020). 

Employment figures in Wales were already lower than the rest of the UK and have spiked since the start of the pandemic. After nine years of gradual decline, the number of people claiming unemployment in Wales has almost doubled in two months “rising from 60,265 in March to 118,600 in May” (Hagendyk, 2020). These dramatic figures also do not take into consideration the job retention scheme, which has allowed employers to furlough staff with the government paying 80% of their wage for the duration of this period. At the end of May 2020, 316,500 workers had been furloughed across Wales (Hagendyk, 2020). When the job retention scheme ends, there is no guarantee that these workers will have a job to return to, leading to the potential for another massive spike in unemployment later this year. For example, the Wales Independent Restaurant Collective has also indicated that redundancy notices for furloughed staff have begun from the start of July.

Particularly problematic for Wales is that they have a “higher proportion of workers on low pay and working in shut-down sectors” than the rest of the UK, making them distinctly vulnerable to this crisis (Johnson, 2020). Job insecurity is also disproportionately affecting young people with 61% of 16-19 year olds and 33% of 20-24 year olds in ‘at risk’ jobs (Hagedyk and Finneg, 2020). This could have long term consequences putting up a barrier to young people attempting to get onto the employment ladder.

There is wide evidence that a significant amount of the Welsh population is also getting behind on their bills. In April there were 10% fewer rent payments than a year earlier, with this figure rising to 12% in May (Bourquin et al., 2020). There have been very similar trends for mortgage payments, although these figures are complicated by the introduction of mortgage holidays. In addition, council tax payments have been 9% lower than expected based on pre-crisis trends (Bourquin et al., 2020). Once mortgage holidays end and the suspension of evictions ends, many people, particularly poor households, will start to feel the damaging effect of this economic crisis.

With large swaths of the economy without a reopening date and businesses that are already open under the pressures that come with social distancing measures, a quick recovery from this crisis seems unlikely. There is also an ongoing threat of localised lockdown if COVID-19 cases begin to rise again. The Welsh economy has been damaged by this crisis and the Welsh Government will need to think carefully about how they respond to these pressures to alleviate the harms caused by the economic downturn. 

Mental Health and the 2007-8 Economic Recession

The financial crisis of 2007-2008 hit the United Kingdom and Wales dramatically “causing increases in national debt levels, decreased GDP, and worsening unemployment rates” (Martin-Carrasco et al., 2016). There were high levels of house repossessions, household debt, an increased proportion of part-time employed and reductions in wages (Coope et al., 2014). Since this recession, there have been large amounts of academic research and discourse on its effects on all aspects of society. 

Many studies have taken place regarding this issue and have resoundingly concluded: “there is a clear and significant relationship between economic downturn and psychopathology” (Martin-Carrasco et al., 2016). One study found for example that home repossessions are linked to a “twofold increased rate of depressive symptoms and general anxiety disorder” (Coope et al., 2014). There is also a clear correlation between unemployment and a strong negative effect on mental health (Elliot et al., 2010). One study found that two-thirds of suicides amongst unemployed people occurred within one year of job loss “indicating the importance of early interventions in this group” (Coope et al., 2015). Another study found that financial/employment-related issues “contributed substantially to 13% of suicide deaths” (Coope et al., 2015).

Sex appears to be a key indicator of vulnerability during times of economic crisis. Studies which focused on suicide rates found no clear evidence of a link between “female suicide rates and indicators of economic recession” (Coope et al., 2014). Men, particularly between the ages of 30-34, seem to be particularly vulnerable in times of job loss with “increased risk of mental health problems and death due to suicide or alcohol use” (Wahlbeck and McDaid, 2012). In 2014, an analysis of suicides in Wales found that for 11% of male suicides debt was mentioned as a relevant factor (Coope et al., 2014). It is important to recognise that suicide rates, whilst on the most extreme aspect of mental health, paint part of a wider picture. For example, in England, it was estimated that for every suicide, 30-40 people will attend hospital following self-harm (Gunnell et al., 2015).

Moving away from sex, some studies identified other individual indicators that put someone at risk of suffering from poor mental health during an economic recession. Indicators that came up repeatedly included unemployment, precarious and insecure work, indebtedness, financial hardship, and housing instability. One particularly notable indicator is a lack of social connectedness (Martin-Carrasco et al., 2016) which is pertinent to the COVID-19 pandemic due to the Government advisory of minimal contact with friends and family outside of their household which may mean total physical isolation for some. 

People with pre-existing mental health problems were also at increased risk during times of financial crisis (Frasquilho et al., 2015). In relation to the current COVID-19 crisis, further research could be conducted to understand correlations between different employment sectors and the prevalence of mental health problems. If there is a connection between sectors that have been shut down during the lockdown and pre-existing mental health conditions, this economic recession could be particularly concerning for the mental health of the Welsh population.

Once identifying a clear connection between economic recession and increased suicide rates, studies seem to struggle to “isolate the exact causal factors” (Frasquilho et al., 2015). Part of the problem is that most research is based on cross-sectional studies, “which seriously limits causality inferences” (Frasquilho et al., 2015). In addition to this, it is important to recognise that the causes behind why an individual would take their own life “cannot be reduced to a single reason” (Nesom, 2019). However, from the research discussed it is clear we must consider mental health as “vulnerable during a recession” and pay particular attention to “people facing economic pressure and unemployment” (Frasquilho et al., 2015). 

Wales and the rest of the United Kingdom went through a period of austerity following the 2007-8 economic recession, which involved huge cuts to public services and the welfare state. It has been suggested that the impact of an economic recession on mental health “varies greatly, depending on how austerity measures and policy responses were implemented” (Frasquilho et al., 2015) and that the impact can be “offset by various policy measures” (Wahlbeck and McDaid, 2012). Research suggests a range of policy measures but most importantly the impact on mental health cannot be lessened by the health sector alone.

One policy measure suggests attempting to mitigate binge drinking and alcohol-related deaths by increasing the price of alcohol (Walhbeck and McDaid, 2012). Another study suggests that there is real importance in providing timely advice to citizens in areas most affected by the recession to help enable them to mitigate the effects of debt and unemployment (Gunnell et al., 2015). A further suggestion is to look to the experiences of countries like Finland and Sweden, who kept consistent the mental health of their nations despite a period of deep economic recession. For instance, in Sweden, they found that people in high debt who had been granted relief “had better mental health than those who had not” (Wahbeck and McDaid, 2012). We will not delve deeply into the policy suggestions found in research but overall studies seemed to recommend welfare provision, protection for housing instability, active labour programmes, and better access to mental health care (Martin-Carrasco et al., 2016).

Welsh Government’s Strategy

In 2012, the Welsh Government launched its new strategy Together for Mental Health. The strategy detailed a ten year timeframe with six goals:

1) The mental health and well-being of the whole population is improved. 

2) The impact of mental health problems and/or mental illness is better recognised and reduced. 

3) Inequalities, stigma and discrimination are reduced. 

4) Individuals have a better experience of the support and treatment they receive and feel in control of decisions.

5) Improved quality and access to preventative measures and early intervention to promote recovery. 

6) Improved values, attitudes and skills of those supporting individuals of all ages with mental health problems. (Welsh Government, 2012)

The strategy also identifies “in the past mental health strategies in Wales have focused on treating and supporting people with mental illness” and instead now focuses on looking at how the government can help people maintain good mental health, with a particular focus on early intervention (Welsh Government, 2012). The strategy has led to cutting down waiting times to receive mental health support from the NHS from 56 to 28 days and has provided increased avenues to accessing support. Following this strategy, the Welsh Government now spends “more on mental health services within Wales than any other part of the NHS” (Welsh Government, 2019). However, this has led to some concerns that the Welsh Government are failing to monitor the success of schemes by not quantifying their effects with “national outcome measures” (Jones, 2019).

In addition to the Together for Mental Health strategy, in 2015 the Welsh Government launched a five-year strategy called Talk to Me 2 focused around suicide and self-harm prevention. The strategy is due to end in 2020 but is likely to be renewed as “ways of reducing the rate of suicides continues to be a high priority for policy-makers in Wales” (Nesom, 2019). 

The Welsh Government has also shown during the pandemic, that delivery of quality mental health services continues to be a priority. For example, in April they launched a free mental health support service for all frontline NHS staff during the COVID-19 crisis, allowing them to access a confidential helpline, face-to-face counselling sessions and guided self-help tools online (Robinson, 2020). They have also provided extra support for mental health across Wales by providing an additional £500,000 of funding for third sector organisation Mind Cymru. This is designed to support people remotely during the pandemic. 

Moving forward, the Welsh Government has a number of specific challenges to overcome in how they respond to the economic crisis and supporting mental health. Firstly, they will be heavily reliant on the UK government for support, as they have been throughout the crisis. For instance, economy minister Ken States explained that the Welsh Government could not maintain the furlough scheme without support (Hayward, 2020). In addition, the tax base that the Welsh Government relies on for funding will now have shrunk dramatically (Johson, 2020) and their borrowing capacity is limited to 150 million per year (Welsh Government, 2016). This means that if the Welsh Government wants to respond to this crisis with the investment that would be required to maintain good mental health, they will be reliant on the central government to give additional funding. 

The second challenge is that the Welsh Government will be reliant on local government and third sector structures that have been underfunded before this crisis. The budgets of local authorities are likely to have shrunk during this crisis as the Welsh Government has promoted council tax reduction schemes as a way of relieving burdens on individuals; the Welsh Local Government Association have suggested that local authorities will lose £33 million per month in loss of income (Hodges, 2020).  After a long period of cuts and austerity since 2008, if the budgets of local authorities are cut any further due to this economic crisis, difficult choices will have to be made “so that local authorities can fulfil their statutory obligation to support the most vulnerable” (Hodges, 2020). In addition to this, the third sector “have also suffered from significant funding cuts” (Downe, Durrant and MacKillop, 2020) before this crisis, and may struggle to provide the support that people will need. 

Concluding Thoughts

There is a clear link between a financial crisis and the worsening mental health of the general population and the Welsh Government will need to find a way to respond to this if they wish to meet the goals of their ten year Together for Mental Health strategy. The Welsh Government will have to recognise that maintaining good mental health during times of economic crisis requires action from all areas of government. There will be significant challenges given the issues of funding presented above so they will need to research and find innovative ways to provide support without the need for large sums of money. This could involve carefully targeted support to those identified as ‘at risk’ during times of economic recession. 


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