Boris Johnson is back in action, the Prime Minister firmly in charge. The message is clear, we are past the peak, on a downward path, through the tunnel, into the light, where sunshine and green pastures await.
The virus has been wrestled to the ground. Now to spray the disinfectant of delivery, to eliminate the threat. The Health Secretary has reached the target of 100,000 tests per day. Albeit the Royal Mail assisted the challenge. 27,479 home testing kits were rushed out by post, to meet the target.
One million tests have now been carried out. Just over 750,000 people have been tested. Approximately 180,000 tested positive. Almost 25% of the "sample" population were infected at the time of testing. Slowly we are beginning to realize, the infection rate may be much higher, than we are led to believe. It could be as high as 20% of the UK population. This is good news for the exit strategy and puts the fatality rate, tragic though this is, into a much better perspective.
In 1918, the infection rate for the Spanish Flu in the UK was 20%. On the Diamond Princess, the infection rate was 20%. In New York, based on a sample of 3,000 undertaking antibody tests, the data suggests 20% of the population of New York may have been infected.
Data from the excellent Covid Symptom tracker research at Guys Hospital led by Dr Tim Spector suggests 2.2 million people in the UK were infected with C-19 on the 2nd April. Since then the number has fallen to just over 300,000. Using the data and back casting, the implied data suggest some 12 million people may have been infected, by the time the 90 day episode is complete.
The viral models are based on SIR mathematics. The Population at time (t) is either Susceptible, Infected, or Recovered. No thought of those with natural immunity. The population first divides into those with natural immunity and those who are susceptible. We know the NI rate among the young, is extremely high. The natural immunity rate in the population overall may well be as high as 80%.
We always suggested the case for relaxation would be revealed at the end of April. Further relaxation and the all clear signal would emerge at the beginning of June. Ministers in the UK have to get Britain back in business and soon. This week, Dr Mike Ryan, from the World Health Organisation, praised Sweden as a model to implement a return to normality.
Wetherspoons plans to open pubs next month. The government will relax the lock down in some way over the May bank holiday. Social distancing guidelines will be modified. Too many industries including travel and leisure will be crippled financially by controls on capacity, if the guidelines on SD are not eased.
Test, track and trace is the new mantra. Shoving a swab down your throat, then up your nose, wrapping it up in plastic, to be tested in a distant lab, seems a bit old hat. New technology developed at Guys and South Korea is here to assist the process. Strange that NHS England is reluctant to work with the Guys App smartphone tracker ...
A Global Recession is on the way ...
The IMF have warned of a global recession, unlike anything experienced in the 1930s. Businesses will go bust on a huge scale and unemployment will spiral.
The International Labour Organisation this week warned that half of the global workforce could lose their jobs. 1.6 million workers were at immediate risk of losing their livelihoods because of the pandemic.
In the USA thirty million people are now out of work. Almost 20% of the workforce have lost their jobs since the end of March. Jerome Powell chairman of the Federal Reserve, said that economic activity would drop at an "unprecedented" rate.
In the UK, we expect output to fall by 20% in the second quarter. Over 4 million workers have been "furloughed". Without government intervention, the claimant count would have increased to 15%. The full shock of a 20% shutdown would see the rate exceed 20% by the end of June.
With a moderate return to work policy, the output shock would fall to 12% in Q3 and 5% in Q4. Even so, unemployment is likely to be 7.5% in the final quarter as GDP in the year falls by 10%.
The government has to get Britain back in business. The CBI, British Chambers of Commerce, the FSB and Make UK have made this abundantly clear. As we said from the start, applying mediaeval measures of isolation, lock down and containment, to a contemporary economy, will drive us all back to the dark ages.
A global recession is on the way to accelerate the process. Time to review the scientific advice, ease the lock down and find a way back in ...
That's all for this week. Have a great, safe, week-end, wash your hands and don't talk to strangers,
The Saturday Economist
John Ashcroft publishes the Saturday Economist. Join the mailing list for FREE weekly updates on the UK and World Economy.
The material is based upon information which we consider to be reliable but we do not represent that it is accurate or complete and it should not be relied upon as such. We accept no liability for errors, or omissions of opinion or fact. In particular, no reliance should be placed on the comments on trends in financial markets. The presentation should not be construed as the giving of investment advice.