Here we go again

It was inevitable that we would see a sharp rise in Covid cases as the restrictions on social distancing were progressively eased over the summer, and we find ourselves celebrating the autumnal equinox with a big rise in infections and a major equity selloff as markets digest the implications of further lockdowns. It feels a bit like March all over again except that this time we have some idea of what we are letting ourselves in for. With the total of Covid deaths in the US today edging above 200,000 (roughly equivalent to the population of Salt Lake City), this should act as a reminder that the pandemic is quite literally a matter of life and death.

Turning first to the rising Covid infection rates, we should note that more tests are being carried out so it comes as no surprise that there are more positive results. The last time the UK 7-day average of cases burst through 3600 in early April, the daily number of deaths was already averaging 400-plus. Today it is running at just 22 – admittedly triple the number three weeks ago. According to estimates made by epidemiologists at the London Schoolof Hygiene and Tropical Medicine on Day One of the lockdown in March, around 100,000 people were being infected every day but at the time the official statistics were showing just 1000 new cases per day. One worrying development is that the number of positive cases relative to the total number of tests has picked up recently and it is now running at its highest since late-May. Roughly 2% of all tests show a positive result compared with 0.6% in late-August (chart). For the record, in early-April more than 35% of all tests registered positive though this is because initially testing was restricted to hospital patients.

We have learned from experience that the trends in other European countries should be followed closely. In March, Italy was the canary in the coalmine. Currently, we should be paying close attention to trends in France and Spain where the 7-day average mortality rate has risen from less than 10 in mid-August to 53 and 107 respectively. It thus should not come as any surprise that Boris Johnson announced a further raft of UK restrictions including the forced closure of pubs and restaurants at 10pm each day and the scrapping of efforts to open up sporting events to crowds from October. With official guidance now exhorting workers to work from home wherever possible, this marks a U-turn from previous policy to force them to return to the workplace. Whilst it is easy to criticise governments for the about-turn, it does appear to make sense to put some form of restrictions in place if we are to avoid over-burdening an already overstretched health service.

But it is less the imposition of restrictions that are the problem than the ill-judged rush to get people back into the office in the first place. Although government ministers did continue to highlight the risks of a second Covid wave, their actions were inconsistent with this caution. More than 64 million meals were served up at restaurants under the government’s Eat Out to Help Out scheme during August. Bringing people together in this way is likely to have played a role in facilitating the spread of the disease. Nor is it any surprise that the rate of infections has risen as schools across Europe reopened from late August. According to a study published last month in The Lancet the reopening of schools needs to go hand-in-hand with a coherent track and trace system in order to keep infection rates down. As the authors note in the case of the UK, “reopening of schools together with gradual relaxing of the lockdown measures are likely to induce a second wave that would peak in December, 2020, if schools open full-time in September, and in February, 2021, if a part-time rota system were adopted.”

Indeed, here we have the nub of the problem: The track and trace system has been a complete shambles. Just to give some anecdotal flavour, a friend of mine works in the NHS and was seconded to the testing team in the spring. He recently quit the role citing the shambolic nature of the organisation, and a lack of experience on the NHS Test and Trace board only one of whom has a background in public health. This rather supports the lurid media stories reporting the difficulties people face in obtaining a Covid test anywhere near their home (another friend faced a 110 mile round trip for their test, only to find that after they were not given the results within the mandated period, the testers claimed to have “lost” them). 

One of great misnomers is that the system goes under the banner of NHS. But in fact large parts of the testing have been subcontracted to private sector companies (talk about destroying a brand!). This is another illustration of the point I have made numerous times on this blog that the private sector often struggles to generate the scale necessary to manage big projects. Yet all this aside, there was a case for a limited reopening of the economy over the summer. However, it needed to be backed up by a coherent testing infrastructure and in the UK we are not at that point yet.

Medical experts are not particularly enthused by the new measures. Paul Hunter, professor of medicine at the University of East Anglia was quoted as saying “It is doubtful that the measures currently being enacted will be sufficient to reduce the R value to below one much before this side of Christmas.” Indeed, closing pubs at 10pm when people have been drinking for the previous 2-3 hours seems to be at best a marginal response.

As for the economic implications, it seems likely that the burden on the service sector will increase still further. Just when it thought it had a fighting chance of survival, additional lockdown rules will deal another heavy blow. The furlough scheme has so far prevented the worst of the recession from hitting the labour market, but it is set to be phased out at the end of October. So far the government has given no indication that it plans any extension. But by imposing restrictions on the economy, voters will expect some form of quid pro quo. There are suggestions that the Chancellor is considering a scheme in which companies would pay staff for the time they are at work, while the Treasury would cover part of their wages for time when they have no work (similar to the German Kurzarbeit system). This is naturally going to come at a big financial cost.

One of the calls made during the lockdown is for a more coherent approach to pandemic planning. Although the government claims to have followed the science, there is an argument that says a whole range of disciplines need to be involved in setting up a national contingency plan (as Tony Yates pointed out here). It is right that societies do their best to protect their citizens and we have to give governments credit for that. But this does come at a huge cost – financially and in other ways – which means that we need to have a proper debate about weighing up the costs and benefits. Governments will be judged on how they reacted to the pandemic and just as they have outsourced aspects of monetary and fiscal policy to experts, there is a strong argument to suggest that at some point we will have to consider outsourcing pandemic planning as well.