Public health, economic effects and the easing of lockdowns in Italy and China

Public health - Karen Taylor, director, Centre for Health Solutions, Deloitte UK

Karen Taylor provided an update on the ‘five tests’ criteria the government cited as necessary for measuring progress towards the UK emerging from lockdown.

These criteria include protecting the NHS’s "ability to cope”, measured by reduction of COVID-19 patients admitted into hospital and occupying critical care beds, as well as a sustained and consistent fall in daily mortality rates and new infections falling to manageable levels. The other two criteria being supply of sufficient PPE and testing capacity to meet demand and being confident that any adjustments to current measures will not risk a second peak.

Karen outlined the importance of virus reproduction rate data used as one of the most-telling indicators for assessing the emergence out of lockdown. Encouragingly, currently there are no regions of the UK where the virus reproduction rate is above one. She cautioned that it is difficult to rely on this data alone, as observed in other countries easing lockdowns, can lead to a resurgence in cases.

She noted the capacity of testing and numbers of personal protective equipment rising to meet future demand and the new NHS track and trace system being launched, to ensure early identification of cases and reduce risks during the easing of lockdown.

Karen concluded by reflecting on some of the positive updates emerging, including two antibody tests given the ‘green light’ from Public Health England. In addition, the use of a new anti-viral drug (Remdesivir) being approved - a positive step forward for treating acute patients. Karen ended her discussion by looking to the future, explaining that a vaccine will be the next step forward, but noted that with a favourable wind this is unlikely in the short-term (and will likely be some 12-18 months before a vaccine is available for use in the general population).

The UK and the global economy - Ian Stewart, partner and chief economist, Deloitte UK

Ian Stewart began his discussion reflecting on the words from Andy Haldane, the Bank of England’s chief economist, who said we are beginning to see signs that the economy is starting “pick-up off the floor”. Ian notes that there are some fragmentary signs of a recovery emerging.

He focused his talk this week on inflation. There are rising concerns that we are in a world of increasingly cheap money. Central banks have reacted to the pandemic by cutting interest rates and have reloaded on quantitative easing, aiming to stimulate risk appetite. Ian notes that these are some of the steps that helped during the 2008 financial crisis.

Ian commented on the issue of rising money growth, pointing to a potential in rising inflation. In particular, as a number of observers have highlighted, that quantitative easing is being accompanied by easing of the supply of bank capital or reserves. He does caution that, although money growth is rising, it does not immediately point to increasing inflation. Money growth may be absorbed by higher asset prices, higher savings by consumers and rising corporate cash reserves. This is coupled with a disinflationary global environment indicated by low oil prices, high unemployment and general caution.

This week, the webinar audience were polled on their thoughts on the outlook for UK inflation. A majority of the audience said that they expected the UK inflation rate to stand between 1-2% in December 2021. Overwhelmingly, the audience believed that a rebound in the economy will take place in Q1 2021 and a return to the office will be in Q4 of this year.

What is it like living and working in Italy and China following easing of lockdown restrictions - Chris Dicks, risk advisory director, Deloitte China and Stefano Buschi, risk advisory partner, Deloitte Italy

As the virus originated in China, Chris Dicks discussed the way the country is ‘ahead of the curve’ in easing lockdown restrictions with the beginnings of people going back to work, shopping centres and restaurants becoming busy, and schools reopening.

Chris reflected on elements of trust as China moves out of lockdown and specifically digital trust being a key part of daily life. He also considered physical trust – there has been a rise in wearing masks in the office, in meetings with clients, reassuring people that there is a collected effort to combat the virus. He also touched on longer term changes to office culture such as remote working potentially becoming embedded in future work culture.

Stefano Buschi gave an overview of the timeline and progression towards easing of the lockdown in Italy. He commented that in June restrictions on the movement between regions in Italy will be eased, but continuous monitoring will remain crucial because if the virus reproduction rate increases again, Italy is now ready to apply selective lockdowns and additional local or centrally coordinated counter-measures.  He also explored the ‘new normal’. Particularly as there has been a sharp acceleration in areas such as remote-working and e-commerce which companies will need to factor into their longer-term ‘business-as-usual’ plans.

Chris and Stefano ended by deliberating on recommendations for organisations – primarily to be prepared for governments reviewing incoming data and therefore regulations needing to change, at pace. Firms will need to be alert to new regulations coming out from policymakers, enhance their scenario and recovery planning capabilities, and lead resilient operations to quickly adapt to unexpected changes. Resiliency and flexibility will be crucial from now on, throughout the recovery period as well as during the ‘new normal’.