Powerscourt Coronavirus Briefing – 22 August 2020

As a number of countries saw new cases surge, the head of the WHO offered cold comfort. Tedros Adhanom said on Friday that he hopes the pandemic will be over in under two years, noting that the Spanish flu of 1918 took two years to overcome but advances in technology could enable the world to halt this virus in a shorter time.

The euro fell as the eurozone’s economic recovery appeared to be losing momentum after several months of improvement. The recent resurgence of coronavirus infections in many European countries to levels not seen since May has brought fresh quarantine restrictions and localised lockdowns. However European leaders are determined to avoid renewed national lockdowns and many of the new infections have been among young people with no big surge in hospitalisations or deaths so far.

Coronavirus is spreading far faster in Spain than in the rest of Europe, with Spain reporting around 139 new cases per 100,000 population in the last 14 days.

Britain’s economy recovered strongly in August. The flash composite PMI rose from 57 in July to 60.3 in August, helped by the reopening of the UK economy in July and August and government initiatives such as temporarily lower VAT on the hospitality sector and discounted restaurant meals.

The growth hasn’t been free of charge – UK government debt exceeded £2tn for the first time, with borrowing at its highest ever peacetime level. Chancellor Rishi Sunak warned that extraordinary government support for the economy has to be time limited.

While US equity markets are reaching record highs, large US corporate bankruptcies are now running at a record pace and are set to surpass the financial crisis in 2009. A record 45 companies with assets of more than $1bn have filed for Chapter 11 bankruptcy, compared with 38 for the same period of 2009 during the depths of the financial crisis and more than double last year’s figure of 18 over the comparable period.

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