Lockdown – Reflections at the end of week 38

For those of you who like taking part in quizzes, remember the name of Margaret Keenan, who, as the first person in the UK to receive an anti-Covid jab outside of clinical trials, is bound to feature in quizzes up and down the country over the next few months. Whilst the roll out of the full vaccination programme is subject to both availability of supplies and the logistical complexity of immunising tens of millions of people, as the ancient proverb says, every journey of a thousand miles begins with a single step. Overall, it’s a matter for great hope.

We all need that hope as the economic effects of Covid were highlighted again this week by figures published by the ONS this week. Although October showed a growth of 0.4% in GDP, the rate of growth is slowing and it is likely that November will produce a fall back as the effects of the stricter lockdown which was in place for much of the month become known. As at the end of October, GDP is still around 8% lower than its pre-March lockdown levels. Unemployment has also continued to grow, and further job losses are expected with the extension of the furlough scheme announced in November seeming to come too late to reverse many redundancy exercises which were already in progress at the time when the extension was announced. Those who live, work and trade in London will also be getting increasingly apprehensive as reports of the previously unthinkable, London being placed into Tier 3 next week, gather pace.

And then, in the week when the death of Barbara Windsor was announced, there is Carry On Leaving, aka Brexit. No trade deal being achieved before the end of the year seems an increasing likelihood, even given the EU’s historic propensity of agreeing its deals at 11.59 pm on the last available day. Alongside the short term disruption that would follow no deal, trading with the EU on WTO terms is being estimated as likely to lop a further 2% off GDP at a time when we really could do without it. It currently seems to be a game of high speed chicken, with two sides who know it’s in their mutual interests to conclude a deal being determined not to blink first because of the overriding politics involved. On the UK side, we have a Prime Minister who dares not take a deal back to his friends in the ERG which does not allow self-determination to the UK over law making and has the European Court hard wired in as the UK’s naughty step. On the EU side, there is a club of nations who, already stung by having been rejected by the UK, are now being asked to allow the UK freely to trade in Europe without paying the fees or having to stick to all the rules. You wouldn’t expect someone who had noisily left a golf club, telling its members on the way out how awful the club was, to be allowed to play in its competitions after leaving both free of charge and using a set of clubs which didn’t comply with the rules, and, in simple terms, you can understand why the EU isn’t willing to grant the UK that indulgence. In blithely promising that leaving the EU would be relatively painless some time ago, the government appears to have relied on the EU needing the UK’s trade more than it needed to be seen to asserting its own fundamental economic rules. In doing so, the UK government has once more committed the sin of over-promising and under-delivering. It’s not too late yet, but at the moment, it’s hard to see what can overcome the impasse because its roots appear to be so fundamental to either side.

Back onto quizzes, what do the following things have in common?

Roses, vacuum flasks, prepared baking powders, sewing thread for retail, corks and stoppers, bicycle inner tubes, sewing machine needles, turbine blades and pistachios in shells.

The answer is that they’re all items which currently have import tariffs charged on them by the UK as part of EU trade rules but will cease to carry tariffs on 1st January 2021. Well glory be for producers and importers of those items, but it shows how complex life may be, especially with so little preparation time.

The pandemic’s been good to many players in the tech sector, including those who stream entertainment into the smart devices that have multiplied like rabbits in our homes. However, there are still elephant traps out there for them, and this week’s faller into the pit has been Netflix. Their offence? They have excited the ire of Alan Titchmarsh over the presentation and content of The Crown, a series in which truth, fiction and conjecture mingle freely through each episode. It doesn’t feel like mobilising Alan’s be-cardiganed army is Netflix’s moment of hubris in the manner of Gerald Ratner (remember him - another quiz question of his day), but you never know.

Enjoy the weekend.

Ian Waine
Senior Partner