This second wave could be twice as lethal as compared to the first.
- Monday, November 2, 2020
Boris Johnson has tried to keep Britain open, but is now faced with the rise in infections and projections that would see the NHS overwhelmed by November 23rd, including the extra capacity provided by the Nightingale hospitals and cancelling of non-urgent services.
Professor Chris Whitty and Sir Patrick Vallance have reported that this second wave could be twice as lethal as compared to the first wave. Their modelling forecasts that daily death rates could reach 4000 and that even with the national lockdown restrictions, the scientist suggest, deaths could reach 2000 per day, which is double the peak of the spring.
Faced with this bleak reality, the Prime Minister ordered a full national lockdown in England starting on November 5th. Unlike the first lockdown nurseries, schools and universities will remain open but the shielding programme for the elderly and vulnerable continues as before.
Across Europe other governments are taking similar actions. There are national lockdowns in Belgium, France, Germany and significant lockdowns in both Spain and Italy. With Austria, Portugal and Greece considering national lockdowns. Developed economies enjoyed a good recovery in Q3, but as infections rise and lockdowns prevail a double dip downturn is almost unavoidable in Europe.
The existing furlough scheme will now be extended until the end of December in England. The Government will cover 80% of the pay of furloughed workers for the duration of the lockdown. In January the Job Support Scheme will then start.
The Prime Minister has suggested that there will be a massive expansion in testing. A new quick turnaround test will be available that individuals can use and give a result within 15 minutes.
The major concern is the impact upon the British economy. Business has been encouraged to re-open as best it could, only now to be closed again. There have been warnings from the British Retail Consortium that the lockdown will cause untold damage to the High St this close to Christmas. High St foot fall is expected to drop by as much as 80%, meaning that online operators will benefit. Established brands could see their online takings improve while independent stores will suffer.
The Bank of England is set to launch a further £100bn bond purchasing programme to fund the second wave lockdown. The Bank will pump £100bn of cash into the UK economy in order to ease the impact a second lockdown will have.
There are widespread concerns over when will lockdowns end and what will be the impact on the state of the nation. We may emerge from the lockdown and the lockdown itself has hurt Britain more than the virus. We can support the rules and wait.
Despite this grim news the FTSE 100 and European markets opened up this morning.
Chris DaviesChartered Financial Adviser
Chris is a Chartered Independent Financial Adviser and leads the investment team.