Concerns over duration of COVID lockdown and macro effects intensify
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COVID concern indices are little changed compared to last week, so attention has shifted to the question: how much longer?
At least four more months to go
Given that the UK has been in lockdown for over a month now, it is concerning to see the expected minimum duration of the outbreak increase steadily – almost matching its peak reading at the beginning of the pandemic. It is up by 16% compared to last week, to just over 4 months from today.
While talks have begun on how to relax lockdown restrictions around the world, exiting lockdown will likely prove difficult for a variety of reasons:
A cure or vaccine may be months away
There is currently no reliable way to detect immunity
The capacity of the NHS and mass diagnostic testing remains limited
And life in lockdown is starting to exert psychological pressures – several respondents in our research panel report fatigue and depression, felt by themselves or colleagues and friends. The prolonged shielding of the vulnerable and extended social distancing can only exacerbate the toll on mental health.
Social isolation is making people want to interact with friends, so the premature lifting of restrictions and opening of borders is likely to lead a heightened risk of a second wave, as we have learned from Singapore’s experience. It is yet unclear whether the USA may experience a second wave too, as many states have started reopening their economies.
Macro effects expected to last until October 2022
The expected duration of the economic effects of the COVID pandemic has increased by over 16% for the second week in a row, reflecting increasing worries about the global economy.
Scheme assets have bounced back and there are investment opportunities, but the full scale of defaults remains to be seen. Leisure, retail and hospitality businesses will be most affected.
But the extent of government debt will likely take years to digest. Will it be possible to inflate it away? Will it be repaid with extra low interest perpetual bonds? Will the government have to resort to monetary finance? These unknowns will continue to weigh on the macro outlook.
What steps should the UK take to come out of lockdown? What major changes in the economy do you expect to see? Click here to take next week’s survey.
This short weekly survey helps gauge sentiment of our community on the pandemic. The results are distributed each week via the community newsletter.
The COVID Concern Index values should be used as indication only and do not constitute advice. Their values are bound by the choices available in the survey on which they are based.
COVID Concern Index:
0 = respondents are not worried at all
100 = respondents are extremely worried
Expected minimum duration of outbreak:
Lowest possible value = 1 month
Highest possible value = 6 months
Expected minimum duration of macro effects:
A methodology change took place on 15/04/2020, affecting data from 21/04/2020 onwards.
Prior to 15/04/2020:
Lowest possible value = 3 months
Highest possible value = 12 months
Following 15/04/2020:
Lowest possible value = 3 months
Highest possible value = 60 months
Concerned about the coronavirus outbreak and its macro implications? Click here to take part in the weekly COVID-19 survey.
