6th May UK Political Update – A Way Out of Lockdown at Last?
Since lockdown in the UK on 23rd March 2020, the UK has recorded a total of 29,427deaths linked to the corona virus (as at 5th May 2020).
It now seems the UK is past the peak of this first wave of the virus and has flattened the curve. As the UK moves into the third consecutive week of declining new cases, a survey by the British Chambers of Commerce reveals most businesses could be up and running only days after restrictions are lifted.
Now in its 7th week of lockdown, the UK has been told that Prime Minister Boris Johnson will announce a detailed plan for exiting lockdown this weekend (8/9th May) but it is expected to be more of a ‘time line for when we can do things’ with perhaps some minor relaxation of outdoor activities and some limited shop openings. Major relaxations are still several weeks away.
After weeks of delay, mass testing capacity for covid-19 symptoms is now in place. This week the government will get the first results of a detailed mass random testing programme that will begin to provide them with solid data on how many covid-19 cases there are around the country and which areas/demographics are most at risk.
This testing programme will allow the government to ease the economically devastating nationwide lockdown, by switching to a much more localized policy of lifting lockdown in certain areas, while quarantining new areas of outbreaks. This ‘test, trace, isolate’ strategy will be the key to managing the virus here in the UK until a vaccine is in place.
The UK government’s position on all aspects of the crisis, from government grants available to affected businesses, to travel advice, to the latest deaths around the UK, is available here.
Currently the official advice from the British Foreign Office is for British travellers to avoid all non-essential travel to any country outside the UK. The government is also actively considering whether to impose quarantine restrictions on any incoming visitors.
6th May UK Economic Update – It’s Costing a Fortune
The Chancellor Rishi Sunak is expected to announce plans next week to wind down the furloughing scheme from July as part of an attempt to get people back to work as the lockdown is eased.
The economic scenarios and projections for UK economic growth in 2020 and 2021 are changing on a daily basis. Below is an update as at 6th May 2020 on the latest economic data complied by PWC, as well as results from a more recent survey that PWC conducted here in the UK on home-working and the impacts on productivity.
Last week’s flash purchasing managers’ index (PMI) data for April suggested the covid-19 outbreak has had a significant impact on business activity. For services in particular, the PMIs signalled the fastest decline in business activity in two decades since comparable figures were available.
The manufacturing sector was also hit, but less severely compared to services activity. This is consistent with the final results of the ONS’s business survey conducted between 25 March and 5 April, which shows that around 24% of businesses in the UK have either temporarily shut down or paused trading.
More recent data on retail sales indicates consumer spending is coming under pressure, largely due to non-food retail store closures as a result of social distancing measures. The value of retail sales fell sharply by 5.9% in March 2020, on a year earlier.
PWC’s illustrative covid-19 scenarios for the UK economy reflect more recent economic data. Both their scenarios assume a continuation of the lockdown in the short term, but for varied periods and at varying levels of intensity. Their estimates for GDP growth in 2020 now range from around -5% to -10%, as compared to -3% to -7% previously. This downward revision reflects more recent data on the significant negative impacts on businesses and the labour market during the lockdown.
PWC have also revised their expectations for 2020 Q1 based on the weaker-than-expected data for March. They expect the economy to recover gradually in 2021, although the level of GDP may still be around 1.5% to 4% below pre-crisis trends by the end of next year.
The deeper economic downturn now expected this year has also led PWC to revise up their estimates of the budget deficit to around 10% to 15% of GDP in 2020/21. This also reflects new fiscal support measures announced in the last couple of weeks, including the extension of the job retention (‘furlough’) scheme to the end of June 2020.
But PWC still expects the budget deficit to fall relatively rapidly to around 4.5% to 7% of GDP in 2021/22 as the economy recovers and temporary fiscal support measures are reversed.
Home-working is possible for over half of workers, but for some, this may come at a cost of lower productivity. The results of PWC’s new home-working survey, conducted between 16-19 April, showed that around 60% of workers (that were still employed at that time) were able to work from home, but for nearly a third of this group, home-working productivity was lower than at their usual workplace. PWC’s survey also finds higher-income workers are much more likely to have remained employed since mid-March than lower-income workers.
6th May – UK Social Update – the Portuguese are our Heroes
British sentiment towards Portugal is extremely positive here at the moment, thanks to ‘Luis from Aveiro’, the NHS nurse who helped save Boris Johnson’s life.
British Ambassador to Portugal, Chris Sainty, also made the headlines here on 25 April, with his piano playing of the songs associated with Portugal’s 1974 Carnation Revolution.
There is also a strong perception here that Portugal has managed its pandemic well, and is leading the way with excellent initiatives like Portugal Tourism’s Clean and Safe certification for hotels, shops and restaurants and the ‘Postpone, Don’t Cancel’ campaign offering holiday makers vouchers for future stays.
All this offers hope for life after covid-19 and makes us look forward to visiting the Portuguese sunshine again as soon as possible.