6 July 2020updated 07 Jul 2020 4:08pm

Why pub vouchers aren’t the right remedy to help the British economy

The demand shock caused by Covid-19 and its consequences won’t be fixed by boosting disposable incomes.

A sign on a plastic 'sneeze screen' at the bar asks customers to use hand sanitizer as a precaution against spreading the novel coronavirus inside The Falcon pub in the village of Rotherwick, west of London, on June 26, 2020 as the landlord makes preparations to reopen. - Lee Watts , the landlord of The Falcon in Rotherwick, a village west of London, has started preparing his pub to reopen from its coronavirus shutdown. Prime Minister Boris Johnson wants pubs and restaurants to be buzzing in the curtailed summer season, despite continued social distancing rules and restrictions. (Photo by Adrian DENNIS / AFP) (Photo by ADRIAN DENNIS/AFP via Getty Images)

How should the government help out struggling businesses in the hospitality industry? One idea being floated by think-tanks, including TEN – The Entrepreneurs Network – and the Resolution Foundation, is that the government should give households a voucher of, say, £300 that can only be spent in pubs, restaurants and hotels, in order to encourage spending.

I understand the thinking here, but I think it wouldn’t work – and in the spirit that you should always write down your bad analyses in order to better understand them later, here’s why.