By Powerscourt on 11/09/2020
The UK economy is benefiting from the easing of coronavirus-related restrictions over the summer. Gross domestic product grew 6.6% in July over June, data from the Office of National Statistics showed on Friday.
But the UK has still only made up about half of the economic output lost during the crisis. More worryingly, its far from clear that the relaxation which has supported this recovery will be allowed to continue.
If virus levels were continuing on the downward trajectory they had been on prior to the past few weeks, this would be cause for cheer for the UK government, validating its management through the crisis. As it is, the ONS data comes just days after the government effectively reversed two months of progress when it announced plans to start limiting social activity again, throwing an exhausted nation into a state of further confusion about what people are and aren’t allowed to do.
The shaky social compact which governments have counted on to govern through the coronavirus crisis is now badly frayed as people become more tired of apparently arbitrary and nonsensical rules.
Politicians around the world have had to walk an agonising line as they have tried to protect public health without restricting liberty and damaging economies. In the early stages of coronavirus, Boris Johnson’s political capital carried him through the country’s resistance to the privations of lockdown. But any such goodwill has apparently now broken down. Mask-wearing and adherence to lockdown rules are now more divisive in the UK than Brexit, according to a survey from Demos.
“People’s experience has been so divergent,” Polly Mackenzie, Chief Executive, told the Guardian. “What has been good for one person has been awful for someone else.” The Guardian article highlights the highly uneven impact of coronavirus on society. From poorer virus survival outcomes for BAME people to wealthy people flaunting their leisure time during lockdown, the experience of coronavirus has served to further divide an already fractured population.
The latest apparently arbitrary rule, the new “Rule of Six” which was imposed by the UK government on Thursday to try to curb the spread of the virus, has not only irritated and confused the population but prompted a revolt within the Cabinet, according to the Daily Mail. It said most Cabinet members had dissented from the rules, which were driven by Health Secretary Matt Hancock.
French President Emanuel Macron faces this dilemma as he prepares to unveil a plan to tackle a steep upturn in coronavirus following the country’s highest ever one-day jump in infections. France on Thursday recorded just under 10,000 new cases.
In news which bucks the general embrace for remote based working, US bank JP Morgan Chase on Wednesday called all of its trading staff back to work. The bank’s heads of sales and research used a conference call to demand that all staff except those with child-care issues and medical conditions had to come back in.
JP Morgan is going against the grain: many large corporations such as BP, Google and Fujitsu have embraced remote working – BP to the extent that it has significantly reduced its global property footprint. Increasingly, however, people are warning that distributed workforces have a devastating impact on the business ecosystem which feeds off large businesses and can damage the culture and values of an organisation, negatively impacting junior staff. (Powerscourt plans to be back in the office from next Monday, albeit with the work force split in two and doing alternate days).
Virus infection numbers continue to remain very high in India, the new epicentre of the virus. India recorded a record daily increase of 96,551 cases on Friday, taking its virus case load to 4.5 million, with deaths growing faster than in any nation in the world.
Major stock indices closed down Thursday, largely due to disappointment on the failure of the US government to agree a coronavirus stimulus package.
WHAT ARE COMPANIES SAYING?
Retail & Consumer
Far more people than expected were spinning their wheels on Peloton bikes as they worked from home, enabling the connected fitness pioneer to post its first-ever net quarterly profit that sent its shares to a record high in after-hours trading. “The strong tailwind we experienced in March as the COVID-19 pandemic took hold has continued to propel demand for our products,” said chief executive John Foley.
Anglo American reported the value of rough diamond sales at its De Beers unit had increased during the seventh cycle of 2020 to $320m from $287m seen in the same cycle a year earlier. “Diamond markets showed some continued improvement throughout August and into September as COVID-19 restrictions continued to ease in various locations and manufacturers focused on meeting retail demand for polished diamonds, particularly in certain product areas,” said Bruce Cleaver, chief executive, De Beers.
Weak demand has led the owner of British Airways to cut more flights over the next three months, despite a recovery in bookings in June. International Consolidated Airlines Group, which also owns Aer Lingus and Iberia, said that there had been a “delayed recovery” in demand for flights and that restrictions meant that capacity this autumn would be 60% down on last year.
EasyJet pilots look to have avoided compulsory redundancies after volunteering for new contracts that will see many of them go part time. The budget airline had warned it could sack more than 700 pilots – almost a third of the total – as it had to make severe cuts in the face of plummeting demand for air travel because of coronavirus. Last month, EasyJet was offering seasonal contracts to pilots that included them flying for just six months with the rest of the year off unpaid as it battled the impact of the pandemic.
Financials & Real Estate
Ashmore Group reported this morning a rise in pretax profit for fiscal 2020 and stated that even though its assets under management performance was hit by the effects of the coronavirus pandemic, markets are recovering and client flows have continued to stabilise. The FTSE250-listed company, which has a focus on emerging markets, posted a pretax profit for the year of £221.5 million compared with £219.9 million for the same period a year earlier.
A British electronic company is to manufacture a potentially “ground-breaking” experimental saliva swab test designed to detect coronavirus within 20 seconds, sending its shares up 40%. TT Electronics has been appointed as the exclusive manufacturing partner for the launch of Virolens, a “non-intrusive” coronavirus test that does not need to be administered by healthcare professionals and if approved by regulators, could get the “world moving again”.
The chief executive of Astrazeneca has said that it is “still feasible” that the COVID-19 vaccine that it is developing with the University of Oxford could be available by the end of the year, despite being forced to stop trials. Pascal Soriot, boss of the British drugs group, said that if an independent review being conducted permitted global trials to resume, they remained on track for submitting data to the regulator by the end of the year.
IN THE NEWS
MPs lead call for furlough extension for businesses that could survive coronavirus crisis – The Daily Telegraph
Boris Johnson’s ‘moonshot’ plan for mass COVID-19 testing is his best idea yet – The Daily Telegraph