By Powerscourt on 12/10/2020
Powerscourt Coronavirus Briefing – 12 October 2020
Coronavirus has become a story of haves versus have-nots, with higher infection rates and poorer disease outcomes in more impoverished areas, both in the UK and around the world.
This could force a sharp and pivotal change of fortunes for governments – and nowhere is this more evident right now than in the UK.
Surprising support from parts of the North of England traditionally hostile to the Conservative Party helped propel UK Prime Minister Boris Johnson into power in 2019 on a Brexit ticket. Now coronavirus and its impact on the economy threatens to pull that support – much of it in poorer areas which are now suffering more proportionately than the affluent South, forcing a pivotal reversal of political fortune.
The Prime Minister is facing a growing political rebellion from the North of England fuelled largely by resentment at the gulf between those who have some protection against the ravages of the virus by dint of their populations’ abilities to work safely and those who don’t.
He is today expected to unveil a three-tier system of coronavirus restrictions. The strictest of the tiers, which will be labelled “very high” will entail the closure of pubs, bars and gyms with the potential for a ban on household mixing, subject to the outcome of negotiations over the weekend. Restrictions in lower tiers will be staggered down to a maintenance of the status quo, depending on the virus prevalence levels.
The parts of the UK fitting into the highest tier of the system are mostly in the North of England, with the South expected to escape the most stringent restrictions. Northern towns and boroughs are experiencing much higher virus prevalence than the South, with Liverpool reporting roughly ten times as many cases of the virus per 100,000 of population than Lewisham in London. Liverpool also has the highest rates of hospital admission.
Epidemiologists have speculated that among the reasons for the relatively high virus levels is that people in these former industrial towns are less likely, due to the nature of their work, to be able to shield themselves by working from home than those in the South which has higher levels of “white collar” work and higher pay. Other likely causes are high levels of household mixing and the large number of university campuses in Northern towns – a magnet for young people.
Chancellor Rishi Sunak on Friday announced that the government will cover two-thirds of workers’ wages at businesses forced to close by the coronavirus lockdowns. Regional leaders in the North, a base the Prime Minister can ill afford to alienate, are increasingly angry at the levels of financial support being offered to their constituents.
Joe Anderson, the Mayor of Liverpool (Labour), said support was being given “on the cheap” and would be more generous if the measures affected London. Other Northern political leaders have been vocal over the weekend in attacking the Johnson government for the perceived lack of fairness.
The Bank of England, anticipating further economic pain over the winter, has written to banks asking for details on the readiness for zero or negative interest rates, Reuters reports.
Meanwhile Australian scientists have found that the virus that causes COVID-19 can survive for up to 28 days on surfaces such as the glass screens on mobile phones or banknotes.
As the UK enters another “long winter” of COVID-19 restrictions, the study looks likely to trigger the levels of transmission paranoia that were encountered earlier in the year.
Most European countries are now seeing their COVID-19 “second waves” peaking. Spain is now recording the highest caseloads in Europe and last week recorded nearly 60,000 new cases. But it is the Czech Republic which most troubles epidemiologists. Despite relatively low virus numbers, the ratio of positive cases to tests in the country is currently about 30%. The country is now facing a national lockdown, according to the BBC.
In the US, the immunologist who has become synonymous with the crisis, Dr Anthony Fauci, has said an edited clip used by President Trump’s reelection campaign is misleading. The clip shows Dr Faucing saying: “…can’t imagine that anybody could be doing more” to fight COVID-19. But Dr Fauci has insisted he was talking about himself, not the President, as implied in the clip.
With the elections looming in under three weeks, both candidates in the campaign are leaning hard into their messages. President Trump’s doctor declared over the weekend that he is no longer infectious.
Asian stocks were mostly higher into Monday led by China’s blue-chip index, with Japan stocks also higher.
WHAT ARE COMPANIES SAYING?
The global leader in engineering and industrial software announced that, notwithstanding Covid-19 related disruption, there has been solid demand for AVEVA’s software. The Group expects to report revenue of approximately £333 million for the first half of FY 2021. This is broadly in-line with the Group’s plan for the shape of the year, save for an increased FX translation headwind and two medium sized subscription deals slipping from Q2 into Q3. AVEVA will announce its results for the six months ended 30 September 2020 on 5 November 2020.
The airport has released an update today in which it reported a fall in September traffic of 82% year on year, to 1.2 million passengers. It is included that most travel is to the remaining European destinations on the UK’s travel corridors list, with long-haul business travel still restricted by international border closures. The statement notes that last week, the Government announced the creation of a “Global Travel Taskforce” which will consider how testing could be introduced to safely reduce the length of quarantine. CEO John Holland-Kaye said: “The Government’s Global Travel Taskforce is a great step forward, but needs to act quickly to save the millions of UK jobs that rely on aviation”.
Retail & Consumer
The specialist retailer of fresh cream cakes has released its half year trading update today for the six months ended 30 September 2020. Following a six week period when all stores were closed due to the UK lockdown, a phased reopening combined with the implementation of new ways of working has meant that all shops are now open for business. Revenue for the 20 weeks to 30 September 2020 was £8.6m, increasing from £6.6m in the same period last year. Like for like store sales also increased by 12.1% during this time. CEO Sukh Chamdal said: “We have received a record number of new store applications, giving us confidence that the momentum in our national rollout will return to pre-COVID levels”.
Financials & Real Estate
Great Portland Estates
The leading investor in central London real estate today published a trading update for the quarter to 30 September 2020. Great Portland Estates announced that 73% of September rent has been collected to date, with 82% of March and June rent now collected and £2.3 million of new lettings in the quarter. Toby Courtauld, Chief Executive, said: “The trajectory of COVID-19 continues to dominate the economic backdrop and disrupt the activities of many businesses across London. GPE is well positioned for any eventuality; our low leverage and high liquidity provides resilience and significant capacity for growth.”
Network International Holdings
The leading enabler of digital commerce across the Middle East and Africa, provided an update on trading performance in the third quarter of the financial year. Notably, there was improved trading performance through Q3 2020 with total revenue of 17% year-on-year, compared with Q2 2020 where total revenue declined 23% year-on-year. Simon Haslam, Chief Executive Officer, commented: “We are very pleased to see the continuation of more positive trading momentum through the third quarter, which reflects the easing of Covid-19 restrictions across our regions and improving consumer spending. Whilst trends are improving, we continue to monitor the outlook and ongoing impact from Covid-19.”
One of the world’s leading developers and manufacturers of critical power control components to the electronics industry, is today issuing a trading update for the third quarter and nine months ended 30 September 2020 and a further update on the impact of COVID-19. XP Power announced that they enter the final quarter of 2020 in a healthy position, with an order backlog of £125.7 million (30 June 2020: £138.2 million). The Board anticipates the Group’s performance for full year 2020 will be towards the top end of current analyst expectations.
IN THE NEWS
Second national lockdown looms, scientist warns – THE TIMES
Exclusive: Calls to end secrecy of body driving UK’s Covid lockdowns – THE TELEGRAPH
Hospitality sector takes ministers to court over Covid curbs – FINANCIAL TIMES