In Beijing the Rush Hour is Back…

Dr John Ashcroft PhD BSc.(Econ) FRSA CBIM

In Beijing the rush hour is back. Travel restrictions are being removed. Life is slowly returning to normal. No new cases have been reported on the mainland for over a week now. China’s revival offers hope to the West and presents a great model for recovery.

In Italy the government is hopeful the Coronavirus Pandemic is slowing down. The Italian daily case load topped out some ten days ago. Authorities claim a loosening of the lockdown could begin within weeks.

We think the case load in Spain peaked last week. Our momentum model suggests the downturn will continue in the weeks ahead.

The UK is now in the “eye of the storm”. The number of cases and deaths will accelerate dramatically over the next few days. Tracking some two weeks behind Italy and almost one week behind Spain, the number of cases in the UK should begin to fall and soon.

Most of our work involves modelling the economy and financial markets, with a bit of strategy on the side. At the moment, the emphasis is very much on modelling the outbreak of the Covid-19 pandemic. Then and only then, can we understand the impact on business life and financial markets.

The China Viral Episode … How long will we be under lock down…

The China viral episode is marked as a twelve week cycle, a perfectly “standard” period of viral disruption. The pattern of outbreak follows a “normal distribution”. It looks something like a bell shaped curve.

The critical phase, the six week “quarantine” phase lasts six weeks. 95% of cases, (within two standard deviations of the norm), occur in this critical phase.

Should we be surprised by this? Not really. “Quarantina” is the Venetian word for forty days. Forty days was the period of isolation for new ships arriving at port in the 14th century. In the UK we are now in the “Quarantine phase”.

Michael Levitt, the British American Israeli biophysicist, predicted the epidemic would disappear from China by the end of March. The Nobel prize for chemistry was the scientist’s prize in 2013. His speciality is not epidemiology nor virology. For Michael Levitt, modelling the viral epidemic is a numbers game and a pretty simple numbers game at that.

In our Covid-19 tracker we analyse the daily situation reports published by the World Health Organisation. With lessons from history and empirical observation, we are able to model the peak and decline in the viral outbreak in the UK and across the North.

The virus is behaving as expected. We expect the case load to peak within days. Social distancing measures could be easing by the end of April. The viral episode should be over by the end of May or early June.

The Prime Minister has hinted of the twelve weeks cycle. Dr. Jennie Harries, the deputy chief medical officer has suggested the case load could peak within days. For the moment, government is anxious the period of lock down and the process of social distancing should continue.

Professor Stephen Powis, the national medical director for England, and head of metaphors for the UK, has suggested, we are not out of the woods but green shoots could be sprouting. Spring is here, but winter could come. We must keep our foot on the pedal, to drive through to a great recovery.

During the lock down, for most businesses, the focus is on cash and survival over the next few months. As with all things, this too will pass, sooner than many expect. Then comes the sunshine and the opportunity to benefit from the strong recovery we expect.

John publishes The Saturday Economist, a weekly update on the UK and World Economy. Specialising in Economics, Strategy and Financial Markets, John was educated at he London School of Economics and London Business School with a PhD in Economics from Manchester Metropolitan University. Chief Executive of pro-manchester for nine years until 2018, John works with a number of professional firms, large corporates and SMEs as a consultant and advisor.