Flatten your sombreros and wait for the sunshine, appears to be the key advice from Government in the midst of the Coronavirus crisis. The government model assumes a 60% infection rate is necessary to guarantee herd immunity.
With a population of 67 million, 40 million will be infected. Three million critical cases, will overload the 160,000 NHS beds available. With a 1% fatality rate, the death carts will be rolling down the streets of Britain. The cry of "Bring out Your Dead" would lead to 400,000 bodies, piled into emergency graves around the country.
Boris Johnson warned this week, we should prepare to lose more of our loved ones. Some thought this was a hint of another cabinet reshuffle, others the Number Ten Dog, called Dilyn was to be returned to the dogs home. It's a Jack Russell Cross, apparently, well, it certainly wasn't very pleased. It was left to the PM's fiancée, Carrie Symonds to assure dog lovers everywhere, the mutt was staying put.
To avoid a crisis in the health service, the government plan is to flatten the curve. We are moving from the "contain" phase to the "delay phase". The "contain" phase obviously didn't go to well, not much hope for the delay phase either. Hope is for the sunshine and UV rays to inhibit or kill the virus as the warm weather arrives.
So what can we really expect? The evidence from China suggests the covid-19 epidemic operates within a six week cycle. 40 days is the classic viral curve. The word "quarantine" is derived from the Italian "Quarantina", "Quaranta Giorni", or forty days. In the 14th century, ships arriving in Venice, were required to sit at anchor for 40 days before disembarking. The Venetians had learned from experience.
So much for flattening the curve. Statistically the reproduction ratio R(0) of the virus is 2.3. Within 21 basic steps, the virus will impact a population of 90 million.
In China just 11 new cases were reported yesterday. In Hubei province, a population of some 59 million, a total of 68,000 cases have been reported and 3,062 deaths have been recorded. The infection rate is just over 1.1% of the population. The mortality rate is 4.5%. The adjusted mortality rate is 3.7%.
In Korea, 250,000 people have been tested. In a population of 51 million, just 8,000 cases have been identified. 66 deaths have been reported. The mortality rate is 0.8%.
In the U.K. so far 1,144, cases have been reported, with 21 deaths recorded. Worse is yet to come, assuming the China syndrome unfolds. The number of cases in the UK could rise to over 75,000 with 3,500 deaths involved. For many this will be a great discomfort and tragedy. For the UK as a whole, Government reports of our potential deaths appear to be greatly exaggerated ...
President Xi visits Wuhan ...
In China, President Xi made a visit to Wuhan. The emergency hospitals built in just ten days, have closed, the epidemic appears to have passed.
Hailing "Victory to Wuhan" and saluting the people as "heroes", the President used his first trip to the province since the outbreak, to signal that China had turned the tide in the battle against the deadly disease.
The message to the domestic audience is the "Rampant Epidemic" has now been brought under control. This has been possible, only under the leadership of people's hero Xi. "It is time for businesses and factories to return to normal" and for the country to refocus on economic growth.
Foxconn founder Terry Gou, reported this week, supplies to plants in China and Vietnam have returned to normal. Resumption of production in mainland China, had exceeded expectations following the disruption from the coronavirus outbreak. The company warned revenue would drop by 15% in the first quarter. Output will return to normal but fears persist for the level of demand in China in the short term and sales in Europe and North America into the summer months.
For good measure the Chinese government confirmed plans to build 215 new airports over the next fifteen years. Fourteen new airports each year will be built. China's aviation industry will become a key part of the economy of the soon to be largest economy in the world.
In the US the President's statements on the outbreak merely added to the confusion and chaos. The National Guard were called into New York. A National Emergency was declared, merely adding to the growing sense of panic.
That's all for this edition. We will be back with more news and analysis, as we look at the impact of the budgets and market developments over the past week.
The Saturday Economist
John Ashcroft publishes the Saturday Economist. Join the mailing list for updates on the UK and World Economy.
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