Economists like to talk about recessions being V shaped, U shaped or L shaped – based on the graph line depicting the fall and speed of the possible recovery. This recession is going to be pear-shaped!
If you haven’t read the Imperial College Covid-19 Report, I suggest you do so right now. Okay, have you looked at it? The numbers are pretty startling….. 500,000 deaths in UK if we had done nothing, 260,000 deaths on last week’s strategy. So the Government had no choice but to initiate the latest controls, and thankfully Boris was sensible enough to see that.
Under the new approach, critical care numbers may be kept within the capacity of the NHS intensive care system. Deaths will be less than 100,000, and may be as low as 20,000.
However, the worrying part of the report was what happens when the controls are relaxed. Under the mitigation approach of last week, the infections shoot back up to the extent that the epidemic has just been delayed.
Under the latest scenario, we have, say, 3 months of lockdown, then normality is resumed for a month. At this point, infections will start to rise again. So after a further month, we go back into lockdown. This made for simplified modelling. What is more likely is that after 2 or 3 months of low infection rates, people become complacent, contacts rise and infections grow again… then there will be a reinforcement of measures. But remember, the models contain lots of assumptions, and could be rather inaccurate. This is not a condemnation of the scientists, just a reflection of an uncertain data they are using.
Ultimately, this is an open-ended procedure. At some point a vaccine will be developed. But it won’t be less than 18 months away. It could be 3 years of close to house-arrest for the whole population.
We have already seen demand for durable goods fall away and car companies suspending production. We will see bankruptcies of manufacturing and service companies, no matter how much Government support is given. The current £350 billion is way too little. And isn’t it a frightening echo of the Boris Brexit Bus with its £350 million? What is it about £350???
Even public sector employees, isolated from the worst of the economic-epidemic will save rather than spend. The general public, as is usual in times of trouble, will save or pay down debt. The collapse in retail spending will be truly eye-watering. We may never return to our previous societal norms. Another article will comment on forever-changed political structures. Workers may end up in small, closed communities for their own protection.
Apologies for the lack of jokes and puns in this article. It just is not a funny topic.
Brace yourself folks. This is going to be a humdinger of a recession.