Boris Johnson unveils plan to end lockdown in England

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Latest news

• Two-thirds of low- and lower-middle-income countries have cut spending on education since the start of the pandemic, according to a survey

• Scottish first minister Nicola Sturgeon said England’s plan to open all schools on March 8 risked sending Covid-19 rates ‘through the roof’

• Cruise operator Royal Caribbean reported a pandemic-driven loss of $6bn for last year but said that long-term demand for cruises remained strong

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Pressure on governments to reopen set to increase as Covid data improve

With the UK acknowledged as one of the pacesetters in the global race to vaccinate, England’s “road map” for lifting lockdown, unveiled today by Prime Minister Boris Johnson, will be closely watched by the rest of the world.

The plans — this time guided by a cautious “data not dates” approach — detail dates for the reopenings of schools and businesses alongside new rules for socialising, while the vaccination programme rolls on. Data permitting, all restrictions are set to vanish by the end of June.

Three studies on vaccine effectiveness, released today to buttress the government’s proposals, will also be noted closely by other countries. The UK was not only the first to begin mass vaccination with authorised jabs but also — controversially — extended the interval between doses from four to 12 weeks, a decision seemingly justified by the new data that show single doses can significantly cut the risk of hospitalisation, even among the elderly.

But, as our Big Read explains, the introduction of vaccines is not the silver bullet to end the pandemic we may have believed back in November. Indeed, data show that most of the recent improvements in health have been due to lockdown rather than vaccinations.

Israel offers a salutary lesson: despite a highly successful vaccination programme, its less rigorous lockdown meant infections have declined at only half the rate of the UK. Meanwhile, other countries, such as France, are still introducing new lockdown measures as variants drive an increase in infections in certain areas. 

As the health data improve, the pressure on governments to speed up the unlocking of their economies is likely to increase — especially in the UK, one of the hardest hit — but, as a new report on loosening the lockdown argues, there is no inherent conflict between health and economic objectives. “Failing to control the virus led to further lockdowns that have only damaged the economy more,” it said.

Visit the FT lockdown tracker to compare government responses around the world.

Global economy

Twelve months on, the eurozone needs to rediscover the “whatever it takes” spirit of its early response to the pandemic, says the FT editorial board. The current plans are timid compared with those of the US, it argues, despite the fact the bloc has suffered worse economically. In the UK, some think the Bank of England should expand its quantitative easing programme if the upswing proves disappointing, while others argue in favour of negative interest rates.

Business confidence in Germany is at its highest level since November, thanks to a surge in manufacturing exports. The Ifo survey also indicated growing optimism in the services sector and fading pessimism in trading and construction. China’s economic rebound means the country is now Germany’s second-largest export market after the US, leapfrogging France.

International economy editor Kate Allen argues that long-term sickness as a result of Covid-19 will put an unbearable burden on countries’ finances without serious changes in welfare policy. The problem, common to most OECD countries, will not be properly addressed by current approaches to sick pay, unemployment benefit or pensions.

Business

Bank earnings season is being closely watched for indications of just how much traders and dealmakers are being awarded for their lucrative activities during the pandemic, compared with their colleagues in other parts of the business. Investment banks generated a record $124.5bn in fees last year as companies raced to raise cash.

British Airways will defer £450m of pension deficit contributions and will pay no dividends to its parent IAG for the next three years as it aims to repair the pandemic’s damage to its business. Our How to Lead series focuses on Ed Bastian, chief executive of Delta Air Lines, and his efforts to steer the airline through the crisis. His key message? Move fast and focus on protecting the company’s workforce and liquidity.

The head of the Nobu hotel group said the industry could only survive the pandemic if it focused on domestic tourism, given the patchy global rollout of vaccines and doubts about international travel. According to Morgan Stanley, average room rates across the UK, Europe and the US are roughly 35 per cent below last year’s levels.

Markets

Global stocks fell as investors began to get nervous about the return of inflation. The sell-off in US government bonds — where returns are susceptible to rising inflation — is also continuing. All eyes will be on US Federal Reserve chief Jay Powell for clues to Fed policy when he testifies to Congress on Tuesday and Wednesday.

Vaccine-driven optimism has prompted investors to return to US small-cap stocks, which have suffered during the pandemic. Small companies are traditionally more exposed to consumer trends and better indicators of economic growth. “Since November, investors have started to see the light at the end of the tunnel and think about the world post-lockdowns,” said one portfolio manager.

Japan’s Nikkei index has jumped 78 per cent from its pandemic lows to hit 30,000, sparking fears of a return to the 1980s bubble era. Although it is regarded as unrepresentative by professional investors, it retains a powerful hold on market psychology, explains Tokyo correspondent Leo Lewis.

Have your say

AdamC comments on Real estate group opens door for return to office:

Elements of Brookfield’s approach here are clearly not scaleable. Take the ride-hailing solution. If every NY employer chauffeured their employees to the office to avoid the subway or bus, the staff members would be spending half the work day sitting in traffic. (No doubt taking the chance to do some work remotely from the back seat — wishing they were back in the relative comfort of their apartment or suburban house.)

Also, the company is clearly modelling a maximalist return to the office. However, many companies, including — I am sure — a proportion of Brookfield office tenants, seem to be planning for a mixed or ‘flexible’ new normal, with in-office work coupled with much more remote working on an ongoing basis. I am slightly sceptical about how such a model would work in practice, but Brookfield might be missing a chance by piloting a ‘2019’ office return, rather than something more along the lines of a mixed approach.

Final thought

“It’s going to be like the roaring 20s” is a phrase much used over the past few weeks as consumer industries look to a post-pandemic revival. This time it’s the turn of the fashion business, with New York catwalks displaying a distinct sense of optimism as designers start to unleash their pent-up creativity and energy.

Prabal Gurung autumn/winter 2021 © Leeor Wild

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Source: Economy - ft.com