The virus remains difficult to control


Even in the most freedom-loving societies there was widespread buy into controls for the initial lockdowns. Now consent is waning.

It’s been another week dominated by pandemic news. Donald Trump’s contentious approach to tackling the disease has been centre stage, with his self-announced triumph over the illness thanks to a couple of drugs that he recommends more widely.

Meanwhile, his opponent in the Presidential race, Joe Biden, puts on his face mask and accuses the President of being too cavalier, whilst declining another debate in person as he suspects the President is still infectious. He wants a more cautious public policy approach to tame the virus.

Since the virus arrived from China, we have argued that markets will dance to the pandemic’s tune. We set out early on three virus-based scenarios of future economic and business activity. We argued that a fast V-shaped recovery after lockdown was unlikely, and considered the disease would linger with continued adverse impacts on businesses needing social contact in person.

Recent weeks have reinforced this judgement. There have been pronounced second waves of Covid-19 in many countries that followed World Health Organisation advice and went through the ordeal of national controls. As expected, the lockdowns pushed cases of the disease and the accompanying deaths right down, only to see them pick up again as rules were relaxed.

As expected, countries are very reluctant to go through another punishing full national lockdown. Our base case assumes a series of rolling local lockdowns of varying intensity, and some national measures that hit entertainment and hospitality most. What we are now witnessing is governments beginning to worry that this intermediate approach is not sufficient.

No clear answer

As they experiment with different mixtures of measures to limit social contact without actually closing down big areas of economic activity, the virus is picking up quite quickly. It is leading the authorities to wish to impose a wider range of local lockdowns – or impose more national measures. Some are now even considering a short-term national lockdown or so-called ‘circuit breaker’, despite the knowledge that this will be very damaging to a number of areas of business life.

View Full Article– published by Charles Stanley on 9th October 2020