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Omicron crisis in Great Britain: The economy breathes a sigh of relief

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Omicron crisis in Great Britain: The economy breathes a sigh of relief

While the omicron virus variant is spreading more and more in Germany and is unsettling the economy, the situation in Great Britain is developing in exactly the opposite way. After the extreme increase in the number of infections since December, the curve there has been turning down for ten days. There is increasing optimism that the peak of the wave will soon be overcome. While almost 220,000 positive tests were reported in one day after the New Year, this number has fallen by half to below 110,000 by the middle of this week. Even more important: In the vast majority of cases, those infected with Omikron only have a mild course of the disease and about 40 percent are completely without symptoms. Significantly fewer people end up in the hospital than in previous waves. Hospitalizations have been falling for three days. Matthew Taylor, chief of the Association of NHS Leaders, said “unless something unexpected changes, we are close to national peak”. He spoke of a “very important moment”. This could be the bet of the Johnson government, which rejected tightening of the corona measures in England at the end of December and beginning of January. It did not introduce any new restrictions on gastronomy, unlike the regional governments in Scotland and Wales. Prime Minister Boris Johnson is under extreme pressure these days because of the “Partygate” affair about a garden party in Downing Street during the lockdown in May 2020 and is fighting for political survival. Some Tory MPs have called for his resignation. It was noticeable that Finance Minister Rishi Sunak was very reluctant to support him. He is considered a promising successor should the prime minister fall. But at least on the Corona front, which is also explosive for Johnson, the situation is beginning to ease noticeably.

From pandemic to endemic

Many health professionals are optimistic. Medical professor David Heymann, a former head of Public Health England, even went so far as to say that Great Britain could be the first country in the northern hemisphere to overcome the corona pandemic with a particularly high level of immunization. 95 percent of the population have antibodies against corona through vaccinations or infections or both. The pandemic will become an endemic on the island – with a virus that can be controlled and “no longer causes a serious illness”. Against this background, the debate in Great Britain about the Corona situation has turned. In background talks, ministers indicate that corona measures could be relaxed again at the end of January. While restrictions have been tightened in Germany and more and more federal states are imposing a strict “2-G-plus” regulation for gastronomy, i.e. only allowing access for vaccinated or recovered people with an additional test, there are no such restrictions in England. In talks, representatives of the catering industry are amazed at the rigid German measures, which would meet with the fiercest resistance on the island. In mid-December, Johnson had only decided to make masks compulsory for public transport and retail stores as “Plan B”; In addition, a vaccination certificate was introduced for large events with more than 500 guests. On January 26, when “Plan B” is evaluated, some measures could be relaxed again. Great Britain, which had suffered an above-average number of infections and deaths in the previous corona waves, would then be in a league with Denmark, which has also decided to relax again after a strong omicron wave. Spain is considering only treating Omikron “like a flu” in the future. Prime Minister Pedro Sánchez no longer wants to record each asymptomatic case individually.

Economists remain optimistic

A relaxation would be very convenient for the British economy, because many companies are complaining about the consequences of the restrictions and regulations, although these are much more relaxed in England than in Germany. The London government’s advice to work at home and avoid offices is weighing on inner-city shops and restaurants, which are seeing sales fall. The so-called Pret Index – the number of sandwiches sold by the large chain Pret-a-Manger, which Bloomberg evaluates – shows that in the City of London and in the banking district of Canary Wharf the number of passers-by and office workers has fallen back to less than a third of the has fallen from pre-crisis levels. Pret boss Pano Christou warned that many catering establishments were under great pressure. “Corporate reserves are depleted because of the pandemic, leaving people in a worse position than they were a year and a half ago.”

In addition, Finance Minister Sunak’s state short-time work support program expired in the autumn. Sunak is considered one of the driving forces in the cabinet to relax the corona rules and return to normality as quickly as possible. There has been a lot of pressure from the economy, suffering from high absenteeism rates because of Omicron, to change the quarantine regulations for infected people. A good one million people currently have to be isolated for seven days. On Thursday, the government then announced that it would shorten the period for a negative test to five days. Economists are optimistic that the economy in Great Britain will only experience a slight dip because of Omicron. Andrew Goodwin, senior economist at Oxford Economics, said: “Omicron is sweeping through the population rapidly, this surge will prove to be short-lived.” Economic activity is likely to rebound strongly once case numbers fall. Consumer spending grew surprisingly strongly in December. However, they will be affected by the sharp rise in inflation, driven by high energy prices, so that many households could even suffer a loss in real wages this year.



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