Analysing the latest health data

14 September 2020

Please join me and our CEO, Richard Houston, for the Deloitte “Back-to-School” Economics webinar today at 13:00 BST. I will examine the economic outlook and Richard will share his thoughts on prospects for business. After the sharpest contraction on record, activity has bounced back in the UK. But the risk of a further spike in COVID-19 cases, the withdrawal of furlough support, and uncertainty over Brexit loom large. Is it possible to restart the economy and suppress the virus? Is the worst past for the global economy? How are firms navigating this period of elevated uncertainty? To join the discussion, please register now at: https://event.webcasts.com/starthere.jsp?ei=1366214&tp_key=52ce65c4ce

COVID-19 case rates are rising while fatalities remain relatively low across much of Europe. This week’s briefing looks at what is happening.

Levels of deaths in most of Europe are running at a fraction of the levels seen at the peak. In the UK, for instance, the seven-day moving average of daily deaths peaked at 942 in mid-April. As of Saturday it stood at 11. The University of Oxford reports that the ratio of fatalities to recorded cases in England was 1.5% in early August, down from over 6% in June.

Improved testing and management of the pandemic and better treatments seem to be behind the reduction in the fatality rate.

In the UK, daily testing has risen from the low thousands to around 170,000, leading to better measurement of infections and more accurate estimates of the case fatality rate. Increased testing and contact tracing have also improved diagnoses of asymptomatic cases, leading to better compliance with isolation rules.

In the initial stages of the pandemic, policy focussed on keeping hospitals functioning and avoiding overloading the system. Older patients were released from hospital into care homes, and, with little testing and shortages of personal protective equipment (PPE), deaths among residents rose. This pattern was seen in the UK, Sweden, the Netherlands, Spain and Belgium.

With improved testing, PPE and management, deaths among older patients have fallen. In Europe and the US the pandemic has increasingly been driven by the under 40 who have far lower fatality rates. (Researchers at Imperial College London estimated that those aged 15-44 have a 0.03% chance of dying from COVID-19. This rises to over 11% for those aged over 75.) Analysis of German data suggests a broad-based improvement, with fatality rates declining across all age groups over the summer months, although older age groups have driven the overall reduction.

In March and April, national lockdowns were the weapon of choice against the virus. Since then the scaling up of testing, and a focus on hotspots, has produced more timely and granular data. Local controls are now the main weapon in containment. (The latest data show that in the worst affected area of England, Bolton, the case rate is 122 per 100,000, more than six times the 20 per 100,000 level that triggers a quarantine for those returning from overseas.)

The fall in death rates is not solely due to improved shielding and testing. Medical advances have played a role too. Dexamethasone, a cheap and widely available steroid now at the frontline of COVID care, has been shown to cut deaths by a third among critically ill patients. Other drugs such as remdesivir and interferon-beta have also shown promising results, raising recovery rates and reducing the time to recovery in trials. Simple techniques, including changing settings on mechanical ventilators, laying patients in a prone position and better use of oxygen, have helped improve outcomes.

And yet the risks posed by the virus are on the rise. Cases are rising again, though in the UK they remain low relative to the actual peak in April (because of limited testing the UK case rate in early April was likely to have been ten to twenty times higher than the reported one). In the UK death rates, ICU usage and hospital admissions are low but edging upwards.

The pace of increase of cases in the UK has accelerated and, seen on a log scale, is starting to look like the ascent Spain experienced in July. A rise in the proportion of positive tests suggests that this is not just a case of higher levels of testing revealing more cases.

The most accurate guide to the actual number of cases comes not from the daily testing numbers but from a fortnightly survey conducted by the Office for National Statistics (ONS). It has recorded a rise in the infection rate to about 1 in 1,400 people, up from 1 in 2,000 two weeks earlier.

The ONS estimate of R, the number of people each infected person in turn infects, has risen from 0.9–1.1 to 1.0–1.2, meaning that the pandemic is expanding. Research by Imperial College suggests that R could be as high as 1.7 in England.

Worryingly, almost 80 local authorities in England are seeing cases above the 20 per 100,000 threshold. While cases are highest in the young, they are rising for those in middle age.

This rising case rate does not even include the impact of the reopening of schools, universities and a growing number of workplaces. Colder weather, an increase in indoor interactions, and the arrival of the flu season, add to the risks.

The great concern is that, in time, rising case rates among young people will reach vulnerable and elderly groups. There is some evidence of this in Spain and growing worries about the potential for the virus to re-establish itself in care homes in the UK.

There is nothing inevitable in this. On linear plots of new infections, which many of us will have seen, growth seems to have taken off quite dramatically. But plotting exponential variables, such as new cases, on a logarithmic scale provides a better idea of the rate at which infections are rising (or the time taken for them to double). On these measures, current rates of spread in the UK are accelerating but remain below those seen in March.

Intelligence on the spread of the virus, adequate supplies of PPE and improved shielding of vulnerable groups will be key to preventing a second wave.

Early action – and public compliance – is vital. Professor Neil Ferguson of Imperial College estimates that had the UK locked down one week earlier the number of deaths could have been halved (back then, the weight of scientific advice seems to have been that the UK was some weeks behind Italy and that locking down too early risked behavioural fatigue at the time of maximum risk).

Economies which have suppressed the virus without resort to full lockdowns, particularly through testing and tracing, have seen lesser contractions in activity than those, like the UK and Spain, which have had to curtail mobility significantly. A second full lockdown, in an already weakened economy, would likely be even more damaging than the first one.

Last week we polled an audience of about 750 people on our fortnightly COVID-19 webinar as to whether the UK would be able to avoid a second, whole-economy lockdown. Two-thirds thought that it would avoid this outcome.

I tend to agree. Applying the lessons from the first phase of the pandemic offers the hope – but not, of course, the certainty – of better outcomes for human health and for economic activity.

The daily cases and fatality data are set to move centre stage again. Viewing them on a log scale helps better capture rates of growth and identify points of inflection. For a full picture we’ll also keep a close eye on less prominent series, including the fortnightly ONS survey and data on hospital admissions and ventilator usage. Please drop me a line if you’d like me to send you the links to the data series we watch.

The pandemic has made amateur epidemiologists of most of us. Rarely has human health mattered as much for the economy as it does today. The path of the disease, and our success in containing it, holds the key to economic activity.

OUR REVIEW OF LAST WEEK’S NEWS

The UK FTSE 100 equity index ended the week up 4% at 6,032. Many FTSE 100 companies earn significant dollar revenues meaning that a falling sterling, as was seen last week, boosts their sterling profits.

COVID-19

India now has the second highest number of cases in the world, overtaking Brazil. Deaths in the country continue to rise
The UK saw its first significant tightening of restrictions in months with socialising limited to groups of six in England. Wales and Scotland announced similar measures
Travellers arriving in England from mainland Portugal and Hungary will be subject to a 14-day quarantine. The requirement was dropped for Sweden
Clinical trials for a vaccine developed by AstraZeneca and Oxford University were restarting after a pause due to a participant falling ill. Such a halt is not unusual
Shipping a COVID-19 vaccine around the world will be the "largest transport challenge ever", according to the airline industry. The equivalent of 8,000 Boeing 747s will be needed, the International Air Transport Association (IATA) has said

Economic developments

A survey by the Wall Street Journal shows that US economists think the US economy is bouncing back more quickly than previously expected
The UK economy rebounded strongly in July, growing by 6.6%
Data from Barclaycard suggest that UK consumer spending in August was slightly above levels seen a year ago
Growth in German industrial production slowed in July
US government agency the Commodity Futures Trading Commission issued a report warning that “climate change poses a major risk to the stability of the US financial system and to its ability to sustain the American economy”
Exports grew strongly in Germany and France

Policy response

The UK House of Commons Treasury Select Committee called for a targeted extension of the Coronavirus Job Retention Scheme and enhanced welfare benefits due to concerns over unemployment
The European Central Bank kept policy on hold. The recent strength of the euro had promoted speculation that further easing was coming
The US Senate was again unable to agree a new stimulus package with Democrats wanting a more substantial programme of measures than Republicans

Business news

Softbank is reported to be near to selling UK semiconductor designer Arm Holdings to Nvidia for more than $40bn, $5bn more than it paid for the company four years ago
JPMorgan called for its most senior traders to return to the office in London and New York as cases remain at low levels in the two cities
Jane Fraser will be the new chief executive of Citigroup, the first female head of a major Wall Street bank
Uber pledged to make all its rides electric by 2030 following concern over the carbon emissions of ride sharing
Premium home gym equipment maker Peloton reported revenue was up 172% year on year in the second quarter as demand surged during lockdown
An esports team part owned by David Beckham is planning a £20m stock market listing, aiming to capitalise on the growing popularity of professional online gaming

Politics

Brandon Lewis, UK secretary of state for Northern Ireland, said that planned legislation to alter the Brexit deal would “break international law in a very specific and limited way”
The European Commission threatened to take the UK to court over the issue
The UK government’s most senior lawyer reportedly resigned over the proposal which is seen by some as undermining the rule of law
US speaker of the House of Representatives Nancy Pelosi said, "If the UK violates that international treaty and Brexit undermines the Good Friday accord, there will be absolutely no chance of a US-UK trade agreement passing the Congress"
The UK and Japan announced a trade agreement which will take effect once the UK leaves its post-Brexit transition period. The deal will add 0.07% to UK GDP, according to the UK government
China has banned pork imports from Germany in a move that many see as a political attempt to assert Chinese authority
Microsoft warned that hackers from Russia, China and Iran were targeting both sides in the US presidential contest
The latest Economist US election model shows Joe Biden winning 53.9% of the vote against 46.1% for Donald Trump, almost unchanged from last week. It gives Mr Biden an 84% chance of winning the electoral college, securing 334 votes against 204 for Mr Trump (270 are needed to win)
An average of betting odds gives Mr Biden a 53% chance of winning the presidency, against 46.2% for Mr Trump, according to RealClearPolitics

And finally… a French tourist was hit with a fine of €1,000 after being discovered trying to smuggle two kilos of sand out of Sardinia in his hand luggage. The sand on the Italian island is protected by law – A plage on both your houses

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