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UK economy buckling under coronavirus strain

World

The UK’s economy is crumbling under the strain of the coronavirus lockdown, as government borrowing soars to the highest levels in peacetime history.

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Prime Minister Boris Johnson, recuperating at his country residence after being seriously ill with COVID-19, is facing criticism from opposition politicians and some epidemiologists for reacting too slowly to the novel coronavirus outbreak.

Ministers are already struggling to explain high death rates, limited testing and shortages of protective kit, and the grim reality of the damage to the world’s fifth-largest economy hit home on Thursday.

Britain’s virus death toll is nearing 19,000 – the fifth largest in the world.

Bank of England interest-rate setter Jan Vlieghe said the pandemic’s economic toll was worse than anything Britain has experienced in the past hundred years at least.

“We are experiencing an economic contraction that is faster and deeper than anything we have seen in the past century, or possibly several centuries,” Vlieghe said.

An economic gauge – the IHS Markit/CIPS Flash UK Composite Purchasing Managers’ Index (PMI)  – fell to a new record low of 12.9 from 36.0 in March, way beyond forecasts in a Reuters poll of economists that had predicted a reading of 31.4.

The UK will issue STG180 billion ($A348 billion) of government debt between May and July – more than it had previously planned for the entire financial year.

The country’s debt mountain exceeds $US2.5 trillion ($A3.9 trillion) and its public sector net borrowing could reach 14 per cent of gross domestic product this year, the biggest single year deficit since World War II.

A Reuters poll of economists on Thursday pointed to a roughly 13 per cent contraction in economic output in the current quarter, which would be the largest since records began after World War II.

The government’s as yet unpublished strategy for unwinding from the lockdown is also under scrutiny.

Deutsche Bank said the country’s limited testing capacity is a problem.

“The UK is lagging behind almost any medium-to-large economy globally when it comes to coronavirus tests,” Deutsche Bank’s Oliver Harvey said in a note to clients.

Health Secretary Matt Hancock has promised to get 100,000 people per day tested by the end of April, though just 22,814 tests were carried out on April 21 – the latest day for which data is publicly available.

A total of 411,192 people have so far been tested and 559,935 tests have been carried out in total in the UK.

Restrictions on everyday life are likely to be needed for the “next calendar year” due to the time needed to develop and roll out vaccines or find a cure, the government’s chief medical adviser Chris Whitty said on Wednesday.

“Close to a million” New Yorkers believed to have coronavirus

New York City’s health commissioner said she believed the city’s 141,800 confirmed coronavirus cases are just “the tip of the iceberg”.

“It wouldn’t surprise me if at this point in time we have probably close to a million New Yorkers who have been exposed to COVID-19,” Oxiris Barbot said.

Governor Andrew Cuomo said 14 per cent of 3000 people tested for coronavirus antibodies returned a positive result.

The preliminary results came from an antibody study that randomly tested people at supermarkets in the state, he told a daily press conference.

“It means these are people who were infected and who developed the antibodies,” Cuomo said.

In New York City, 21 per cent of those tested had antibodies.

The governor said the data could point to a lower death rate than some estimates.

If the results translate to the true incidence of the new coronavirus, it would mean 2.7 million people have been infected in the state of New York.

“If you look at what we have now as a death toll, which is 15,500, that would be about 0.5 per cent death rate,” Cuomo said.

He cautioned that this was based on preliminary data and that the death toll “is going to go up” and currently does not account for at-home or presumed deaths.

He also noted that the results could be skewed as they were not people who were in their home or isolated, who may have a lower rate of infection.

Health experts say that immunity to the new coronavirus is still not proven, even if it is assumed.

Warnings Africa could become next virus epicentre

Africa has seen a 43 per cent jump in reported Covid-19 cases in the last week following a warning from the World Health Organisation that the continent of 1.3 billion could become the next epicentre of the pandemic.

Africa has a “very, very limited” and “very, very strained” testing capacity, John Nkengasong, director of the Africa Centres for Disease Control and Prevention, said in his weekly briefing on Thursday.

It means that the surge in infections on the continent is likely to be even higher in reality, he said.

The WHO’s recent report painted a grim picture for Africa. It warned the virus could kill more than 300,000 people and push 30 million into desperate poverty.

Africa still has time to avert such a disaster but testing people and tracing virus cases is critical, Nkengasong said.

“It all depends on what we are discussing here, which is, ‘Are you testing? Are you finding the cases? Are you isolating and tracking the contacts?’ It is not a prediction that means it must happen.”

Africa is struggling on the testing front.

In the two months since the continent began mobilising to fight the outbreak, less than 500,000 tests have been conducted on a population of more than one billion.

That is just 325 people tested per one million people, Nkengasong said. That is far lower than Italy, one of the world’s worst-hit countries, he said by way of comparison.

African governments reported nearly 26,000 cases as of Thursday, according to the Africa Centres for Disease Control and Prevention, up from just over 16,000 a week ago.

Although those figures are still relatively small in the global picture, the sharp increase is a cause for concern. The previous week saw an increase of 29 per cent.

“If you don’t test, you don’t find. And if you don’t test, you are blinded. If you don’t test, you are not ahead of the curve,” Nkengasong said.

-with AAP

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