Extinguished Rebellion

Ten more days of spiralling into the corona virus black hole and many countries have already resorted to extreme measures. In Europe national borders and interests are back in control – along with extreme financial measures that are making the 2008 financial crash look like small beer.

Man1And at the personal level the number of deaths continues to grow – despite the increasingly draconian restrictions on movement and personal contacts. With 6,077 deaths in Italy and 2,300 in Spain the figure of 335 for the UK seems low – but we face many more yet in the months ahead. And it looks like UK Grandads will be the demographic with the highest mortality.

Here the over 70’s are already in isolation until June. But when the survivors emerge the virus will not have disappeared. They will become victims then rather than now – unless a cure has been found. Since no one has a natural immunity the virus will continue to infect the population for years – possibly re-infecting those that have survived the previous waves. And we already have several strains of the corona virus indicating that it could adapt over time and evolve into something even worse.

Back at the international finance level the desperate measures are creating vast debts as governments strain to prop-up essential services – healthcare, education, police, fire, ambulance, military, public transport, fuel, water, etc – and the vast numbers of unemployed. All against a backdrop of collapsing government taxation income and falling asset values.

But it’s not entirely bad news. The huge falls in pollution and greenhouse gas emissions have already resulted in clearer skys and climate benefits – sooner than even the most ardent activists could have reasonably expected.

While on the political front the people of Scotland will be well aware that their country could not have faced the current challenge on its own. And those that want to extend the UK-EU trade negotiations are having to face-up to the fact that the world economy has already been reset. The trade agreement fine print has been reduced to irrelevance. The people that survive this will need the essentials of life to be traded as safely and efficiently as possible – with no room for artificial barriers created by bureaucrats and civil servants.

Viral Threat 2

Five weeks on from Grandad’s last posting and the Wuhan Virus now has a new name – plus has expanded world-wide. In the UK Covid-19 has now claimed 21 lives but that may well have increased even before this posting appears online.

BruegelReaper

Elsewhere in Europe the situation has deteriorated rapidly with worst-case Italy reporting yesterday that 1,016 deaths had been identified as Covid-19 related. And many of these were senior citizens.

If the compounding growth rate of infections continues the next few weeks will see the number of deaths grow every day – claiming mainly the elderly and the already vulnerable. The short-term prospects are to prepare for bad news.

But even if the virus has no direct impact on your friends and family, the financial chaos that is being created almost certainly will.

Take cities like Oxford, Cambridge, York and even Edinburgh that depend upon tourism and overseas students for a large percentage of their turnover. Hotels, restaurants, retailers, airlines, coach and train companies are all going to experience drastic cuts to their incomes. Jobs will go and businesses will fail – even if there is billions in government support. And away from these high profile examples there will still be major disruptions and life-changing events. Take football – where many clubs below the Premier League depend upon gate receipts and local corporate sponsors. If both income streams stop then closure can be the only outcome.

The hope is that the numbers of new infections will start to decline by summer – and allow some of the restrictions to be lifted; so letting trade slowly return. However the UK, along with other major economies, was far from being financially healthy before Covid-19 appeared. This is why we have had such low interest rates – and why the Bank of England governor, Mark Carney, cut interest rates to 0.25% before the Budget last week. Quite a way to leave office – tomorrow!

How will this all turn out? Who knows. But Grandad is off to read-up about Spanish Flu and check that his will is still valid …