Mbroken down planes and deserted terminals tell their own stories. Aviation has been one of the sectors hardest hit by the pandemic and appears to be one of the last to recover. Unless things improve over the next six months, Heathrow will see fewer passengers this year than in 2020.
So it’s not as shocking to see the airport general manager wondering why the recovery has been so slow. And while John Holland-Kaye was talking about his own business, he might as well have been talking about the whole economy when he asked: Where’s the vaccine dividend?
It’s a good question. Six months ago, when the UK was mired in its winter lockdown, the government’s message was that the early start of the UK vaccination program would lead to a faster economic recovery than in rival countries.
Yet, after a start in activity, recent signs suggest that the recovery is faltering. The United States has regained all the ground lost during the pandemic, while UK production is 4.5% below its pre-crisis level. Last week’s activity snapshots were stronger in the Eurozone – still catching up with jabs – than in the UK.
Meanwhile, Springboard retail analysts found that footfall to shopping destinations was barely affected once consumers were legally allowed to shop without masks on July 19. Activity was strong on “Freedom Day” itself, but quickly waned and over the week as a whole showed an insignificant increase over the previous seven days.
A number of factors appear to be at play. Despite the success of the UK vaccine supply, the opening up of the economy initially proceeded at a relatively calm pace. After being forced to announce a third foreclosure for England earlier in the year, the government was in no rush to cash its dividend.
By the time the government was ready to lift all remaining restrictions, there had been an increase in cases caused by the Delta variant of the virus, resulting in a four week delay. Infection rates continued to rise during this time, which means that when “freedom day” finally arrives, it comes with a health warning: be careful.
Not everyone heeded this advice, as evidenced by photos of crowded nightclubs. But many have, and it will be some time before they revert to their old pre-crisis ways, including willingness to fly.
Markets falter as China crackdown on private education
When Donald Trump was in the White House, barely a day went by without the state of US-China relations moving the markets. Headlines shouting “trade war looms” were the trigger for a stock sell-off. When the story subsequently turned to “trade war avoided”, stocks rallied again.
Relations between Washington and Beijing are no warmer under Joe Biden than they were under Trump. If anything, the atmosphere is even colder now and China’s latest crackdown – on its private education sector – won’t do anything to help.
Beijing is showing unusual naivety if it believes that preventing private education companies from making a profit or raising capital will solve the problem of China’s aging population by lowering the cost of schooling.
This will increase suspicion – in the United States and elsewhere – of Xi Jinping’s increasingly authoritarian regime, especially as the latest restrictions follow tighter regulations imposed on Chinese technology and companies seeking to be listed abroad. According to reports, the UK government is considering ways to pull China’s state-owned nuclear power company out of all future power plant projects.
It’s no surprise that financial markets plunged after Beijing’s latest announcement. China has a sluggish economy, an increasingly hostile approach to foreign investors, and is on a collision course with the United States. It won’t be the last wobble.
Government sees Nissan as sign Brexit can work
David Cameron knew he was in big trouble on the night of the Brexit vote when Sunderland voted 61-39% to leave the European Union.
The size of the clearance vote caused stocks and the pound to fall as Sunderland is home to the Nissan auto plant, which was seen as threatened in the event of a Brexit.
Predictions that Nissan workers would quickly get “buyer’s remorse” have been proven wrong, not least because for the government, Nissan is a sign that Brexit can work and is therefore too important to fail. The Japanese company may well have invested £ 1 billion in a new generation of electric cars and has now announced plans to hire 400 new workers, but significant state aid has likely helped secure the deal.