Lockdown – Reflections at the end of week 34

The first week of stricter lockdown has been eventful.

Yesterday, in amongst a plethora of figures about allsorts, we learned that daily new Covid infections in the UK had topped 30,000 for the first time. Whilst there are discrepancies between how different countries report Covid, we also became the first European nation to record 50,000 Covid related deaths. It is hard to know how much the new infection figures reflect increased testing and how much they are influenced by other factors, but they are not happy reading.

On the other hand, the announcement about the BioNTech/Pfizer vaccine suggests that help really is on its way and that, whilst it will take some time to roll out an immunisation programme and for immunisation to become effective, the end of Covid’s dominance of our lives is in sight. In passing, I must also say that I broke the habit of many years and watched the start of Question Time last night, and felt some sympathy for the Health Secretary. When asked what percentage of the population would need to receive the vaccine in order to achieve an effective herd immunity, he replied that he didn’t know, a perfectly fair answer in the context of a relatively new virus and an entirely new vaccine. He then got a bit of a hard time for not knowing. Whilst our politicians have made a rod for their own backs in, over the years, evading such questions or simply making the answers up, I didn’t think he quite deserved that for giving the straight answer.

So far as the economy is concerned, the news is that epic slump has been followed by significant recovery, both being in percentages which are generally unimaginable in a long established developed economy. The sting in the tail is that there is still a sizeable gap between the size of the economy before the March lockdown and the size of the economy at the end of September, with the pace of the rebound slowing in September. It is also of note that we have been more badly affected than most other major economies which is being attributed to the percentage of our economy which is based on services and hospitality rather than manufacturing, a factor which points toward further slowdown before the end of 2020 as the current lockdown bites those sectors.

Whilst the Bank of England is committed to further economic support for the economy, the Chancellor is now starting to think aloud about how the support provided by the government can be recovered. Politics are starting to kick into the debate, with many Conservative MP’s expressing concern at measures which might hit their traditional voter base. The Chancellor is also faced with the fact that life is already pretty tough for many but for others, there is a strange feel to their personal finances as the effects of lower interest rates and savings on items such as travel costs and entertainment are boosting household incomes. There is a similar split in the fortunes of businesses with some having already failed and some clinging on with the benefit of government support whilst others are holding significant and growing cash balances. These are factors which are going to make one size fits all solutions difficult to find.

Some better news for the Chancellor and the north of England is that at a time of growing unemployment and redundancies, the number of job adverts has reached pre-March lockdown levels, with the north west of England being at the forefront. Whilst this news is to a degree tempered by the extent to which the jobs advertised are in the health sector, with nursing prominent, it is encouraging nonetheless. The north east has also seen growth, which perhaps offers Dominic Cummings the possibility of finding work in Barnard Castle in January.

In a week that includes Friday the 13th, the scale of a number of these developments is such that they feel at times more like a film playing out than real life. I’ll wrap up with a couple of other stories from the week which feel like they belong in the cinema. People attending the Crown Court in Stoke this week saw Buzz Lightyear, Mickey Mouse and Captain Hook and other Disney characters listed as defendants. It turned out that the court was trialling a new case management system and that the listings had been published in error. And the Scotland men’s football team qualified for a major international championship for the first time since 1996. In typical fashion they put their long suffering supporters through the mill with their passage involving a play-off game and a penalty shoot out. The Hollywood twist was that they avoided their frequent habit of improbably perpetrated self-inflicted damage to come through it.

Enjoy the weekend.

Ian Waine
Senior Partner