On a visit to Nottingham this morning, Boris Johnson warned that a second wave of Covid-19 could be on the verge of 'starting to bubble up' in Europe. Meanwhile, he defended his government’s lightning-speed reintroduction of a 14-day quarantine for travellers entering the UK from Spain. But concerns of a second wave are not solely related to Spain or select European countries. Yesterday the Financial Times revealed the Prime Minister’s warning to over a dozen businesses that the threat of another Covid wave in autumn is very real. It's not just what’s happening abroad, but the possibility of infection rates spiking within the UK that has captured the government’s attention.
It is not yet clear whether the spike in Covid detection will translate directly to higher hospital caseload or death tolls. In Spain, the new infections are predominately thought to be amongst young people who didn’t adhere to social distancing. In Sweden, more testing saw official Covid rates spike last month but the number of Covid deaths continued a steady decline. Still, the benefit of the UK moving more slowly out of lockdown compared to its European counterparts has supposedly been that it could watch how things unfold abroad and update its guidance accordingly, hopefully weeks or even months before the same problems surface here. Based on the government’s own logic, a Covid spike abroad is as much a focal point as it would be in the UK.
The Prime Minister revealed yesterday that he does not believe a second wave would be as bad as the first: the NHS has more capacity, medics are now better equipped to treat the virus, we’re stocking up on PPE, and our economic and social activity has already adapted to deal with the virus. His view is somewhat reflected in Capital Economics’s new forecast, out today, which offers one of the first illustrative examples of what might happen to the UK economy should there be a second wave of the virus.
The forecast also accounts for a better and more efficient response to the virus a second time around. Crucially, it assumes a ‘better ability’ to track and trace, as well as local lockdowns instead of a national one. While the UK’s experiment with local lockdowns seems to have proven successful so far, there is dispute as to how local they've really been – the goal is to shut down boroughs, streets and individual offices, not entire cities, home to hundreds of businesses and thousands of people. More concerning is the continued absence of a track-and-trace app, which isn’t expected until autumn at the earliest. The delay stems from the government's U-turn on its decision to build its own app before belatedly embracing the Apple-Google framework.
But even if the UK’s Covid protocol is up to scratch come autumn, as the forecast shows, the UK could be in for another serious economic contraction, even without a full-blown national lockdown. With the promise of a V-shaped recovery still up in the air, the wonky W-shape of a second wave raises serious questions about the UK’s ability to provide more fiscal relief, the longevity of the unemployment surge we know is coming, and the viability of businesses that have made it through the first wave by the skin of their teeth. If there were to be a second wave, it may not be as devastating to our physical or economic health as the first wave was: but in the grand scheme of things, that’s not saying much.