And now the difficult part starts- easing lockdown and restarting economies. After 2 months most countries in Europe, Asia and North America are trying to return to normality or at least a socially distanced one. Other places like Brazil remain in a life and death struggle with this vicious strain of Coronavirus.
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Notwithstanding a much anticipated second spike in the R-number any time from the phased summer relaxation of lock-down rules to a winter return of the virus along with seasonal ‘flu which may occur until a vaccine is eventually found. Governments are under considerable financial pressure to restart their moribund economies before being engulfed in debt and deflation or maybe inflation, unemployment with social unrest.
Who would want to be President, Prime Minister or even a First Minister? Where tensions escalate between fighting a deadly virus and maintaining a functioning economy. Presenting an unwinnable situation for politicians as each require opposition solutions: one where people are kept separate, safer but financially precarious and another where people interact with each other raising economic prosperity along with re-infection rates.
This is especially evident in developed countries with service-led economies such as the UK, US or Spain who have all been hard hit with coronavirus cases in the early months. However, infection levels now spreading to larger countries like Brazil and Russia. China’s true position is hard to fathom also India’s has a battle with social distancing and reporting numbers with a degree of accuracy with such a massive population.
Politicians have faced a barrage of criticism for making slow or wrong decisions which are unenviable to make as they have been as prolific in their adverse effects. There have been problems from the onset with the underestimation of COVID-19’s severity, with PPE shortages in many countries, and a slow response to testing in the UK and US especially.
Variations with reported figures have caused arguments. However, data is required to report and project the status of the R-value to enable policy judgements to be made and proceed effectively. Not unexpectantly some countries- South Korea, New Zealand and in Europe Germany have kept the virus at bay more than others and their economies are further re-opened quicker than the UK or the US.
Many pundits and opposition parties in the UK have poured scorn on PM Boris Johnston for not dismissing his senior advisor Dominic Cumming immediately after it was revealed he drove from London to Durham, a 250 miles journey approximately, during lockdown to organise child-care as he and his wife were infected and beginning to show symptoms of COVID-19. President Trump has kept the world bemused with his medical advice on how to deal with the virus and very much to everyone’s disbelief about injecting bleach or indeed being the only man not wearing a facemask in a facemask factory as he expressed had to make a speech later on.
As much as coronavirus stalks the planet serious consequences loom for many countries in exiting their lockdown periods. Schemes were hastily implemented for mortgage holidays and furloughed workers, with plans for negative interest rates on government debt are being considered by finance ministers including the UK.
In the US unemployment in May hit a staggering 33.3 million people a figure much higher than the financial crisis of 2007-2009 (BBC,2020). The Bank of England is warning the UK economy could shrink by 14% and unemployment double in 2020 (Guardian, 2020).
These figures suggest a tough recession is already with us by the time of writing and that business closures will occur on a large scale everywhere over many sectors of the economy. The hospitality, retail and travel industries are already in turmoil with the commercial property sector set to be a long-term loser from the social effects and lifestyle changes caused by the coronavirus pandemic.
Civil liberties will be strained with the introduction and widespread use of test and trace applications to monitor large amounts of data from people to warn of the viruses’ spread among the population. With other possible adaptions that in the coming months and years will arise from using massive data surveillance technology on mass populations.
Notably, in the UK with the NHS’s test and trace application- what happens when someone who is notified that they have come in to contact with an infected person and needs to self-isolated for 14 days and has to do this time and time again if they work in an industry like hospitality or retail?
Many people would not be able to work effectively. Similar problems exist with self-isolating for 14 days after a foreign trip- overseas holidays just would not be practicable neither would short business trips.
Furthermore, who is going to effectively monitor and enforce these 14 days self-isolation requirements for potentially millions of people on a regular basis? It will become a thankless task for all concerned but conversely a useful method in checking the virus’s spread. It has also been a primary condition for the easing of lockdown.
Financial markets are being resilient, after a volatile period in February and March, however markets in equities, currencies or credit may take a volatile turn for the worst if the realities of a hard recession overcome the resilience of market expectations for a recovery in the world’s economic fortunes. An effective vaccine for COVID-19 is unlikely for many months yet and beyond the expectations currently wished-for by financial markets worldwide.
It will be a rocky path ahead thus making the important decisions is not for the faint-hearted or thin-skinned. Our political leaders-love them or hate them and it is easy to do the later-need to make the effective decisions. Everyone else just needs to hope their advice and their policies work or our civilisation will suffer as much as our health.
Once the pandemic is contained and counties can function normally again adopting the better changes and habits, such as lower pollution and crime rates, that occurred during lockdown. Furthermore, democratic procedures, checks and balances set-aside during lockdown need to be reinstated and rule by government degree should not become normalised. Remember quantitative easing was an unusual untested policy adopted to help support financial market in 2007-9. It is still being used 10 years later.
Let us hope any further waves and economic effects of COVID-19 are not as long lasting as QE.
LDC.
References-
BBC News, 2020, ‘Coronavirus: US unemployment claims hit 33.3 million amid virus’ Reporting by Helier Cheung, 2020 BBC, available on at: https://www.bbc.co.uk/news/business-52570600 (website accessed 29/5/2020).
Guardian, 2020 ‘UK unemployment to double and economy to shrink by 14%, warns Bank of England’ by Richard Partington, 2020 Guardian News & Media Limited London, available online at: https://www.theguardian.com/business/2020/may/07/uk-economy-to-shrink-by-25-percent-and-unemployment-to-double-warns-bank-of-england-coronavirus (website accessed 29/5/2020).