Powerscourt

By Powerscourt on 23/01/2021

Powerscourt Coronavirus Briefing – 23 January 2021

ANALYSIS

Figures released yesterday showed, predictably, that UK retailers struggled to recover in December from the previous month’s lockdown. The Office for National Statistics reported that retail sales rose by just 0.3% in December, prompting GBP to fall slightly against both the dollar and euro.

Retail sales for the entirety of 2020 were down 1.9%, the biggest calendar-year drop since records began in 1996.

Worryingly, it doesn’t look like retail activity will be able to pick back up anytime soon as it seems the newer coronavirus B117 variant could be deadlier, as well as more transmissible, than the original virus.

In the usual three-way briefing last night, Prime Minister Boris Johnson warned that the mutant strain could be up to 30% more fatal and lockdown will not be lifted anytime soon.

“Currently, the rate of infection is forbiddingly high, and I think we have to be realistic about that,” he said. “I think we will have to live with coronavirus in one way or another for a long while to come.”

The UK’s Chief Scientific Advisor, Patrick Vallance, went in to explain that for every 1,000 60-year-olds infected with the B117 strain, 13 or 14 might be expected to die, compared with 10 in 1,000 for the original strain.

Boris Johnson also alluded to the possibility of tougher border restrictions for the UK. Currently, passengers can still travel abroad for business purposes and, as of last week, must present a negative COVID-19 test result on arrival into the UK.

A combination of lockdown and vaccine rollout has seemingly led to the number of infections to slightly fall; however, the death rate is still increasing. Last week’s total number of deaths was 8,686, up 16.4% on the previous seven days and the highest in Europe.

Separately, the Financial Services Compensation Scheme budget for the upcoming financial year was announced yesterday by the Financial Conduct Authority. The scheme will have a pot of over £1bn to pay out to those consumers affected by financial company failures, a 48% increase to cope with a predicted rise in claims.

Further afield, data released this week suggests that just 13% of offices in New York city are currently occupied and deals for commercial and residential property dropped by 46% in 2020 compared to 2019.

Goldman Sachs, JPMorgan, Citigroup and KKR & Co. were just some of New York’s biggest employers to urge local leaders to let them help with the COVID-19 vaccination effort, arguing that the slow rollout is putting the state’s economic recovery at risk.

New York’s vaccine effort is being led by Larry Schwartz, who has not hidden the fact that the vaccine supply is running low. Various Wall Street firms also offered to team up and lobby the new Biden administration to get more vaccine doses into the city.

 

WHAT ARE COMPANIES SAYING?

Industrials 

Carnival
The world’s largest cruise operator has cancelled European and Australian sailings and has extended its suspension of all US departures until the end of April. In the early stages of the pandemic, many large outbreaks took place on ships and demand for cruise holidays has since collapsed, having devastating impacts on the industry. Operators were optimistic that the vaccine rollout would encourage passengers back, however, rising hospital admissions in Europe and the US have left ships remaining docked. Christine Duffy, President of the company’s Carnival Cruise Line, said it would “take a while longer” before customers returned to sail again but that she was “heartened by the booking demand and activity” the Group continues to see.

KLM
The flag carried airline of the Netherlands has announced it will halt all flights between the UK and the Netherlands, following Boris Johnson’s press conference yesterday. Flights will be grounded for five days from today. KLM published a statement on Twitter yesterday evening at 6pm, commenting that “KLM has had to make the difficult decision to adapt our flight schedule to ensure all requirements are adhered to.

Eurostar  
The train operator Eurostar has been told that the French authorities are ready to give the Company financial support. Eurostar has struggled over the pandemic, yet has not received the same assistance as its aviation competitors. France’s junior transport minister, Jean-Baptiste Djebbari, has said he is talking with the UK government about ensuring the cross-Channel train operator survives the COVID-19 pandemic. Eurostar is 55% owned by French state rail company SNCF and the UK government sold its 40% stake to private companies in 2015. The number of passengers has fallen by 95% and now runs one daily train in each direction from London to Paris and from London to Amsterdam, via Brussels. 

 

Consumer & Retail

Amazon
Recent analysis published by the US Public Interest Research Group has found that hundreds of essential products have sustained significant price increases on Amazon this year. The research compared the pre-pandemic price of 750 “essential” items sold on Amazon’s marketplace and found that some had jumped to many multiples of their original price. 409 products had increased by over 20% and 136 had more than doubled. The product with the most significant price jump was patio heaters, with one model jumping 366% from $150 to $699. Grace Brombach, author of the report said “What we found, was that while Amazon is taking measures to crack down on price-gouging on their site, it is still very much an issue.”

 

Biomedical

CDC Group
The Government’s development finance division, has made investments amounting to over £400 million in the healthcare sector. Despite a mandate to tackle poverty, it has been criticised for funding private hospitals which are unaffordable for low income patients. Investments have included a private hospital in Zimbabwe used by the country’s elite and a Brazilian gym chain. A spokesman for the CDC defended its investments and said it was “committed to the provision of universal health coverage.” The aid body said its healthcare investments had treated over 12 million patients in 2019 and provided 87,970 jobs for healthcare workers around the world.

Wockhardt
A once-renowned Indian pharmaceutical company, Wockhardt has had a critical role in delivering the COVID-19 vaccine to millions. Between 2013 and 2017, Wockhardt was warned by the US Food and Drug Administration over failings at several of its plants, resulting in shares tumbling by over 70% since 2013. However, a Wockhardt-owned plant in the Welsh town of Wrexham is now responsible for putting the vaccine in vials and packaging it for dispatch to the UK regulator for inspection. After the UK government awarded the group the contract in August, Habil Khorakiwala, Wockhardt’s Chairman, hailed a “huge sense of purpose and pride.”

 

IN THE NEWS

Borrowing jumps to record levels amid more pandemic restrictions – The Times

NHS staff band together to survive Covid ‘war zone’ – Financial Times

Exclusive; Half a million fewer vaccines being supplied to NHS next week – The Telegraph




DAILY CORONAVIRUS BRIEFING - How business is responding to the crisis MENU