Covid-19 update: UK economy set to shrink by 35 per cent in Q2, says OBR

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The OBR has published its coronavirus analysis, predicting the economy will shrink by 35 per cent in Q2. Kate Andrews has the details on Coffee House, and James Forsyth explains below what this means for the lockdown.
There have now been outbreaks of Covid-19 at more than 2,000 of Britain’s 11,300 care homes. Around 10 per cent of UK Covid-19 deaths take place outside of hospital, according to data released by the ONS.
An editorial in the British Medical Journal has called the use of chloroquine to treat coronavirus ‘premature and potentially harmful’.
A poll shows Brits rank amongst the most supportive of lockdown measures, even at the expense of an economic hit. Some 74 per cent say restrictions should continue despite the growing impact on the economy, vs 61 per cent in US and 54 per cent in Germany and Sweden.
A group of constitutional experts have released plans for a ‘virtual parliament’ after Commons speaker Lindsay Hoyle said proceedings should continue remotely.
The teachers’ union has written to the government claiming its members are ‘disturbed’ by suggestions schools could reopen – despite a recent study by UCL suggesting school closures have little impact on the spread of the virus.

The OBR has just published a scenario setting out the consequences for the public finances of a three-month shutdown: it imagines a 35 per cent crash in GDP in Q2 (ie. April, May and June) followed by only a partial recovery. This will focus ministerial minds. An extension of the lockdown is inevitable.

But what remains less clear is how – and when – it will be eased. Everyone accepts that not all the restrictions are going to go at once. The most likely route out is people being urged to go back to work if they can’t work from home, shops being gradually opened back up, schools going back for the second half of term and then pubs and restaurants starting serving again with mass gatherings taking the longest to return. The timing of all this depends, I suspect, quite heavily on public opinion. In her column in the next issue of the magazine, Lionel Shriver remarks on how strange it is that ministers should be led by public opinion in entering (and ending) lockdown.

Perhaps so, but these are strange times. The government gets nightly polling data on the lockdown and its popularity and one of the big questions is whether public opinion will move as other countries ease their lockdowns. The cabinet is divided into doves, who want the lockdown to last, and hawks, who worry that it’s causing more damage than it’s preventing. As one hawk in government puts it, ‘If every other country in Europe is open and doing business, it is very hard for us not to be.’

As even supposedly-doveish members of the government admit, this concentrates minds. At the same time, the virus is not overwhelming the NHS’s capacity. With a third of intensive care units still unused, even at a time of huge daily casualties, the government is becoming more confident that there are sufficient ventilators to handle demand.

In words

80-85 per cent of active ingredients that are in medications that you, I, and all of France take, are made in China. Do you actually think we can maintain a long term dependency on medication being made in China? I’m very happy to see that Sanofi [major French drug company] has actually decided to repatriate a part of its production of active ingredients to France and Europe…it’s exactly what must be done. To guarantee our economic independence and learn from the economic consequences of the epidemic on the value chain in order to have an organisation of the global economy which is closer to centres of consumption.

– Bruno Le Maire, French Minister of the Economy and Finance

At the beginning, Public Health England got off to a good start in terms of testing to try and make sure they caught people coming into the country with it. I then think it’s not scaled as fast as it needs to scale — and that’s being done now. But I do think testing is an incredibly important bit of this. It needs to be done at scale, and it needs to be able to be done rapidly enough to look at outbreaks and isolate.

– Patrick Vallance on Peston conceding the failures in UK ramping up testing

‘We’re not used to being two metres apart – it’s usually further.’

The care home factor

In most countries, UK included, updates for ‘Covid-19 deaths’ refer to those in hospital. But what about the 400,000 residents of British care homes? The government’s official figures say there’s been a Covid-19 outbreak in 13.5 per cent of care homes, but the virus has now been found in two-thirds of UK HC-One care homes according to Sir David Behan, former CEO of the Care Quality Commission. There are striking figures, and could add between 5 per cent and 10 per cent to UK deaths. The ONS this morning released data for the cumulative number of deaths involving Covid-19 up until 3 April, revealing 406 deaths outside of hospital, of which just over half (217) took place in care homes. The number of hospital deaths at that point had been 3,716.

In pictures

ei_(3).jpeg — 107-year-old, Havahan Karadeniz, is discharged from Istanbul Education Research Hospital after recovering from Covid-19 (Photo: Getty)

Global news

The total number of confirmed global cases is set to pass two million.
Emmanuel Macron has extended the French lockdown till 11 May, but signalled that an exit strategy would be in place after that.
The US State Department has warned of safety issues in Wuhan lab studying coronavirus in bats (Washington Post).
Governors in America plan to coordinate their efforts to reopen businesses, despite the President asserting his ultimate authority to kickstart the US economy.
Meanwhile, New York State is seeking rain ponchos to use as surgical gowns.
Germany’s Foreign Minister has called for a single contact-tracing app to be rolled out across the EU to allow Brussels to coordinate the lifting of the lockdown.
Turkey’s parliament has approved the release of 90,000 prisoners in an attempt to reduce overcrowding during the pandemic.

Research

Covid-19 and immunity: Do those who recover from Covid-19 become immune? A Shanghai study suggests it might not be quite so straightforward. Of 175 Chinese patients with mild symptoms, 70 per cent developed strong neutralising antibodies (usually the older patients). But about 25 per cent developed a low response and 5 per cent produced no antibodies. This raises questions as to whether mild illness builds up protection. Boris Johnson has suggested that those with antibodies can ‘go back to work’ and Matt Hancock has spoken of certificates, or even wristbands, to identify the immune. In the New York Times, Kathryn Olivarius looks at the ‘dangerous history of Immunoprivilege’.

In data: How has consumer spending changed in the lockdown? Earnest Research has tracked changes in US consumer spending.

Coronomics

No new ventilators produced by British industry have been granted regulatory approval yet.
France’s budget deficit is now the largest in post war history, sitting at 9 per cent of GDP.
One in nine homeowners have been granted a mortgage holiday, according to UK Finance, worth an average of £260 per month.
AstraZeneca’s share price shot up by 6 per cent this morning after the company announced it is to begin clinical trials for a drug to treat Covid-19.
The chairwoman of the National Care Association has called on Rishi Sunak to scrap VAT on protective medical equipment for care homes, telling how one provider paid the Treasury £8,500 in just one week.