Tag Archives: economy

Viral Threat 2021

Twelve months ago the new Wuhan virus was very much a Chinese problem. One that would not spread worldwide and, like earlier infectious, such as Ebola or SARS,  would be contained before it infected us in the UK. Wrong!

Man1We now have the prospect of UK Covid-related deaths reaching 100,000 before too long. And this is against a backdrop of almost 93 million cases and 2 million deaths world wide. But vaccines have been developed, approved, mass produced and started to be distributed – so deaths and serious infections should start to decline by summer time. If the promises hold true.

Then we, like many countries, will have to assess how our nation gets back to something approaching normal. This is going to be difficult after so much disruption to both the economy and our daily lives. If the Government spends billions to boost business then it could be a catalyst for a new Roaring Twenties. A period where the young and rich party like there’s no tomorrow, the stock markets boom and many old fashions are discarded.

But having already spent billions of borrowed money spending even more restarting damaged businesses might just burst the bubble. And the Roaring Twenties could be followed by an almighty crash … just like the 1920s.

It’ll All End In Tiers?

It’s autumn and already the supermarket shelves are being stacked with Christmas specials while the British media tries to generate the false impression that there are shortages of essentials due to panic buying. For this Grandad mince pies are high on the essentials list – but with the raw materials to make them already stockpiled there are no concerns on that front.

Man38However taking a somewhat broader view there are plenty of things that could go badly wrong for Britain. First the infamous, but non-existent, trade deal with the European Union is needed by both sides – but not at any price. And those that expected the EU to take a pragmatic and fair approach have been rudely shaken out of their dreams. We have to hope that the politicians can stop playing their political games and come to a sensible solution. But it’s not something that has happened very often, or very quickly, in the past – and the EU has a worse than average track record; mainly because there are so many different countries trying to come to a common consensus. What suits Spain does not suit Germany, etc, etc.

With just three months remaining before the end of transition and just a few weeks before the next final deadline any businesses relying on importing or exporting across the Channel must be crying out for definite border policies and procedures. The optimistic view is that exports from the EU to UK will be VAT free and cheaper but the pessimistic view is that something as simple as buying an item on Amazon will involve extra processes that increase the final price significantly. Who knows? Certainly not Joe Public. And most probably not Joe Public’s member of parliament either.

Then a close second comes Covid-19 – or rather the various attempts by our leaders to solve a health pandemic by issuing random rules, laws and slogans. Today’s news that even if a vaccine is found and approved by early 2021 it will take all of next year to treat most people. So we face starting 2021 with both Covid lock-downs and massive hold-ups at all the ports. But our government has things under control, it says, and is looking to make things clearer by putting Covid restrictions into three tiers …

Some distance behind these two we have threats of political rebellions in Scotland and Ireland – plus even within Scotland – and an increasingly unstable situation within British royalty. With the head of state being in a high-risk age group, the heir apparent being past retirement age, the Duke of York being tangled up in US litigation and Harry, formerly known as Prince, having become a minister of the Woke-ist religion there is a minefield of potential disasters not far ahead for the House of Windsor.

Interesting times …

Equinoxe

The day counter on the Daily Mail web site is showing 183 days so that’s half of the year spent living under constantly changing restrictions. From the Spring Equinox to the Autumn one the whole country has been subjected to an unprecedented torrent of instructions about our daily lives from on high. Even the Queen has been severely restricted by advice and laws which supposedly protect us, our economy and our health service from the terrors of Covid-19 infection.

Man37But today’s announcement to parliament by our Prime Minister (and Covid victim), Boris Johnson, set out not just more rules to be followed but also the prospect that they will be in place for a further six months.

Quite what will have improved the infection rate by then is not at all clear. One assumption is that there will be an effective, economic and safe preventative vaccination by then. But that’s a big ask when the common cold corona virus still has no vaccine after decades of attempts. Plus there are reports that natural antibodies to protect us from Covid-19 only have a limited life – so calling into doubt the value of any mass immunisation programme even if a vaccine is found.

The current picture suggests that nothing will actually remove the Covid-19 virus from the planet by then. Government measures can restrict its spread but the virus is like some invisible flood water that will break into anywhere that is unguarded. And even New Zealand’s success cannot guard every one of its citizens all of the time.

But it is also clear that after six more months of restrictions the national economy will be in a terrible state and those bountiful government handouts for everything from overseas aid to winter fuel payments; from high-speed railways to child benefits; from arts funding to state pensions will be facing the axe.

Messers Whitty and Vallance may have been painting an extreme scenario with 49,000 cases per day by 13-Oct-2020 but it seems more likely that by 2021 our high streets will be ghost towns and their civil service pension funds will be facing collapse or at least a major devaluation. Then they may have to concede that Sweden has played the hand dealt to it by fate much better …

What’s Going Wrong?

As a fan of cycle racing the virus restrictions have meant that so far this year there has been no chance to watch hours of live TV from around a variety of scenic European venues.

CaptainBlogsBut today it was back to normal with Eurosport showing live coverage from Tuscany of races rescheduled from Spring. With a packed programme scheduled for the coming months being trapped at home will be a bit more bearable – despite the threats of infection from second waves and the constant stream of new rules to restrict our behaviour.

So how did Tuscany cope handling a sports event within the pandemic restrictions? No problem – the crowds were just as dense as previous years. No one in the crowds or amongst the officials was seen wearing face coverings. And the competitors were definitely breathing heavily by the finish. True it was outdoors which might help but the sheer numbers packed into the centre of Sienna meant that social distancing was non-existent. However it seems that no one was breaking the rules. Tuscany is functioning pretty close to normal. And based upon this afternoon’s observations the financial impact on this part of Italy will be far less than it will be in the UK.

Back here we have the Chief Medical Officer warning that restrictions cannot be relaxed as we have reached the limit of what can be allowed. The government are reversing the lifting of some restrictions with very little notice – and there are threats that pubs will have to shut in order for schools to reopen after the summer break.

What’s going wrong? Italy was hard hit at the start of the pandemic – so how come it is the UK where the restrictions are much worse and the financial impact greater? Clearly there are serious problems – but whether these are caused by the Goverment, the public servants, the medical professions or simply a stupid, non-compliant public is anyone’s guess …

Just The Facts Ma’am

Back in the day this time in July would be when whole towns went on their annual holidays. And even though the days of mass employment in a regional manufacturing industry are long gone people still feel the need to take a break now.

JoeFriday1But this year there are some unique economic clouds to add to those in our summer skies. At the bottom end the over 75’s are facing the cost of a BBC TV licence being deducted from their pensions in August. While at the top end around 9 million furloughed – and government funded – staff are waiting to see what happens when employers are required to start contributing next month. The expectation is that many companies will simply make many of them redundant – with plenty of companies folding to avoid paying their debts.

Trying to get an accurate picture of employment this autumn – based upon realistic projections about thousands of employers – is almost impossible. Instead we have just best guesses. But even the most optimistic observers expect that unemployment will rise – quite possibly by a lot. A view that does not seem to be reflected in the recent story that unemployment could hit 3 million.

Given that there are 9 million on furlough – and that some sectors such as tourism, hospitality and entertainment are predicting up to 90% of them will become redundant – the figure of 3 million unemployed seems too low. For that to be the case a large percentage of the 9 million need to return to work.

Perhaps that is the government plan – but what ever is being calculated behind closed doors it would be much better for Whitehall to give us the unvarnished facts .. just the facts.

Viral Pandemic

Two months ago at our first posting the Wuhan virus was a distant threat. Now it’s spreading all around the world; with Europe being the first directly impacted once the virus had left Asia.

Heckerslyke_160Trying to keep up with the ever increasing counts of infections and deaths for make depressing reading – but for the record Italy has had at least 13,915 deaths, Spain 10,935 and the UK has now reached a total of 3,605 – officially. Sadly the figures for the USA seem set to dwarf those of Europe – and looking ahead much of Africa lacks the infrastructure to cope; especially if aid from developed countries is diverted into over-stretched health care services back home.

All the points about the financial impact have already been said – but the numbers just keep getting larger and larger. Businesses from the smallest trader to the mega corporation are facing complete collapse has virtually every sector outside of food, power and health care is shut down either by government order or by lack of customers. Everything from tourism to sport – pop concerts to voting – has been stopped. For example the mega-millions normally circulating in the world of TV broadcasting rights has evaporated. The Grand National, Wimbledon, even the Olympic Games will not happen until normality returns. If it ever does.

The year 2020 will be remembered for a long time – by the survivors …

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 …

Viral THreat

It is estimated that one deadly strain of avian influenza caused the deaths of 50 million people worldwide. In England it was named Spanish Flu. It broke out here in 1918 so towards the end of First World War.

Man1

The current outbreak of Wuhan Virus is being taken very seriously but so far represents just a tiny fraction of the human cost that the pandemic of 1918 incurred. However the big issue that most commentators are not addressing is the disproportionate impact that the quarantine measures are going to have on world trade – and the global economy. In effect the entire world’s factory has been all but closed.

Each week that a factory in China, normally producing goods for export, remains closed around 2% of its annual production is lost. How many factories in China are already closed? And how many more will follow? How long before they can re-open?

Now we can all survive if the launch of the latest smartphone is delayed for months or even years. But the mighty Apple will soon feel the icy blast of recession if it runs out of products to sell. And it’s not just factory products impacted. At the opposite end of the process raw materials like coal, oil, iron ore, etc will experience a big drop in demand. This in turn will lead to a drop in prices and lay-offs in countries far away from the regions infected by the Wuhan virus.

There is a serious risk that there will be a collapse in world trade – and perhaps one big enough in scale to surpass the Wall Street Crash of the 1920’s … And that is yet another piece of 20th century history that no one wants to see repeated.