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How will the Covid-19 crisis conclude?

The second wave of the novel coronavirus has arrived in the UK and mainland Europe. We look at what could happen next.

The second wave of the novel coronavirus has arrived in the UK and mainland Europe. We look at what could happen next.

Charles Stanley

in Let’s talk about markets


Only a week ago we noted that the virus was on the move again, threatening to disrupt economic recoveries, force governments to impose more lock down actions – and accelerate the trends to a more digital and socially-distanced world.

The world's media had been haunted by stories of virus surges in many countries and reports of new curfews, closures and precautionary measures in Paris, Madrid, Amsterdam and talk about it in New York. So, how might this all end?

There is no getting away from the run of bad news last week, as the infection rates shot up in many places. In the last two weeks, India has recorded another 1 million cases and 14,000 deaths. Overnight we heard of another 88,000 cases and1124 deaths the day before. The USA has seen more than half a million new cases and almost 10,000 deaths. Brazil has witnessed 375,000 new cases and 9,400 deaths. In Europe France has suffered worst with 129,000 new cases and 598 deaths. Spain and the Netherlands have also seen worrying rises, with the UK lagging – but with cases increasing rapidly.

Over the whole period of the pandemic Peru, Belgium and Brazil – excluding very small countries – have led the death rates per million people, with two of the three following World Health Organisation advice carefully.

In each case countries are seeking to respond with more restrictions, but putting off the idea of a return to the full lockdown that many introduced in March and April . The case numbers and death rates march upwards, though so far hospital admissions and serious case numbers are well below the levels in March. The EU Commission announced that some member states are now experiencing a worse situation than they did in the spring, spreading more alarm.

So, what will governments do next?

They will continue their careful progress of introducing more measures to keep people apart. There is general agreement to keep schools open, but there may be fraying over universities with the encouragement of more remote learning for these older students. Most countries are trying regional and local lockdowns, sectoral lock downs and regulations, and trying to keep open more of their economies than in the spring.

The preferred World Health Organisation and scientific establishment way out of the disaster will come from the licencing of one or more vaccines – which it claims will contain the spread sufficiently to allow the ending of most restrictions on economic and social life when enough people have been vaccinated. This will take time – and still could result in no acceptable vaccine being discovered.

Markets, on good days, assume a vaccine will be produced soon, with roll out from early next year, to be followed a better economic recovery. China is well advanced with its vaccines but has not subjected them to western testing, which would be needed to sell any in the advanced markets.

Sufficient containment which would permit reasonable activity levels outside the sensitive areas of leisure, pleasure and hospitality rests on extensive test and trace systems. Most countries have developed these with variations. Most countries also have domestic debates about the inadequacies of their own version, and most now see that their test-and-trace systems have not prevented a second surge. The difficulties of test-and-trace systems are not wholly – or even mainly – related to government and contractors problems with delivering enough tests though that has been an issue in some countries. The main issues causing poor results from test-and-trace systems come from public responses.

Some people with symptoms do not seek tests, fearing the consequences of being found as a carrier. Many who have the virus with no apparent symptoms are simply unaware of the need to have a test. Some people who are found to have the virus do not properly self-isolate for a fortnight as they need to earn money, care for others, go shopping or get bored by ‘house arrest’ and so ignore the rules.

Many who have been in contact with a carrier are unavailable to be told they need to self-isolate. Others are told – but may decide not to bother as it inconveniences them or prevents them earning money and keeping their homes going. The tests are also still prey to false positives. When only around 1% of those tested in high testing countries do have the disease it means there could be a high incidence of false positives within those small totals.

What good looks like

To work well, everyone with symptoms would be tested. The positive test results would be accurate, and all would obediently self-isolate for a fortnight. All contacts of those carriers would be contacted – and all would agree to self-isolate until proven they had not contracted the infection. That way, transmissions would decline and the successful country could permit more activity.

This is more likely to occur in Asian societies than in western ones, and under authoritarian governments rather than democratic ones, reflecting the different degrees of social pressure and police enforcement. Some hope that soon there will be a breakthrough with a reliable quick response test that would allow places to test visitors on the spot and allow more activities needing larger gatherings of people. Such a development would be very helpful.

The other way we might be able to move on is if the virus circulates more amongst the young and fit with fewer adverse effects, whilst we get better at shielding the elderly and vulnerable. That way we could allow more social and economic activity whilst cutting the death rate. Meanwhile, the second wave comes at a further cost to traditional business and especially to leisure, tourism, hospitality and entertainment. The digital revolution will march on, offering online substitutes for most of the things we used to do by meeting together.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

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