Waiting on the Return of London, the UK, and Normalcy (as Redefined)
The summer starts on the 21st of June…well…not for the England. Some observers first labeled this summer as the “Summer of the Vaccine” but maybe it is the “English Summer…We Await”
Prime Minister Boris Johnson delayed plans to lift the remaining covid-19 restrictions by a month last week with the infectious delta variant rapidly spreading throughout the country. Now, the full reopening of pubs and restaurants among other places will have to wait AGAIN.
But it is not the socializing and half-empty venues that is annoying the British. It is the lack of a defined pathway to full reopening within the borders and at the borders of the country.
“I think it is sensible to wait just a little longer,” Johnson told the press. The messaging from the Prime Minister’s office is centered on the belief that the UK could quicken its vaccination program, which is already one of fastest programs globally with more than 70% of over-11s with one dose and 48% of over-11s with their second dose, according to The Economist.
According to the Prime Minister’s office, the situation will be reviewed again on the 28th of June. Waiting for that review will be hard with all the recent news.
The UK recorded its most covid cases in a day on Thursday (17th June) since mid-February. Johnson has generally said let us see the data before making a decision…but all the data says the highly infectious delta variant and future variants may be hard to control in the short term, especially considering that spread is most prevalent among those aged 20 to 29.
British citizens consequently are imagining a summer where they are either stuck inside or outside their beloved UK. This may not be too bad for summer holiday planning (for those, at least, outside the UK)…the UK was not necessarily at the top of the beach holiday destination list. EasyJet, for example, said roughly 85% of its operations are now focused on Europe and 15% in the UK. Nevertheless, there were many British citizens and non-citizens who expected to spend some time in London this summer reconnecting with friends and family they may have not seen in nearly 2 years.
Yet the lack of summer holiday unsurprisingly is not the biggest concern amongst the British…and the rest of Europe. The British (and the rest of the world) are stuck speculating on whether and when London and the country will return to some sense of normalcy. The rise in European equity markets alongside American equity markets is not that consoling and reaffirming to observers inside and outside the country.
The UK suffered its biggest GDP decline in 300 years in 2020 with the economy shrinking by nearly 10%. The latest CBI Economic Forecast still estimates the UK. to return to pre-pandemic levels towards the end of 2021 despite the delay with lifting covid-19 restrictions. The CBI forecasts GDP growth of 8.2% this year, and 6.1% in 2022 (compared to 6.0% and 5.2% in CBI’s previous forecast).
The recovery numbers significantly depend on household spending, which account for more than 25% of the growth for 2021, underwritten by increased real incomes and households spending the excess saving from the last 12-18 months. Yet the absence of ‘normal’ life in London does not suggest a UK on track for a hefty rebound in spending. The easing of restrictions and the quickening of return to offices, pubs, and restaurants is an obvious vital step in that process. The April growth numbers in the UK with British people beginning to visit nonessential restaurants and stores looked optimistic as a starting point. But again, that was before the recent news on delayed reopenings.
Beyond the numbers, the lingering uncertainty surrounding London’s social and economic return remains an issue. Again, the remote nature of work and soaring equity markets provide some comfort. But a true return of normalcy must include the flow of international foot traffic and business to the country…the latest delay in reopening suggests that getting to that next step of ‘international openness’ may be easier said than done. Absent packed streets and offices both with locals and non-locals, the UK’s exit from the EU somehow feels like a permanent exit from the world’s ecosystem (at least for now).
