BUSINESSES FORCED TO CLOSE AMID LOCKDOWN MEASURES, DRIVING UNCERTAINTY

On 23 March the British Prime Minister Boris Johnson announced a series of new stringent containment measures that essentially put the United Kingdom on lockdown, effective immediately. The new measures have been introduced in a bid to reduce the spread of the Covid-19 virus and will be in place for an initial three weeks, with the Government assessing whether to extend or relax the measures on 13 April.

SIGNIFICANCE

Describing the Covid-19 outbreak as a ‘national emergency’, Johnson stated that people in the UK will now be required to stay at home and are only allowed outside for four reasons: to buy vital supplies such as groceries and medicines; to seek medical assistance or aid a vulnerable person; to conduct a form of exercise once per day; and travelling to and from work, but only if absolutely necessary. All public gatherings larger than two people, excluding those you live with, are also banned.

Police will also be given new powers to enforce the more stringent measures, including the levying of fines and dispersing of public gatherings. However, many have raised concerns over the capabilities of the police to enforce the new rules effectively, with senior police officers already reporting sizeable
numbers of officers self-isolating, reducing enforcement capacity over the coming weeks.

The measures were introduced following growing evidence that a significant minority of people were ignoring the social distancing advice already in place, with people still gathering in large groups in public spaces, despite the government advice not to. Johnson’s announcement mirrors a similar decision taken by German Chancellor Angela Merkel on 22 March after people continued to congregate in public, raising concerns of the public exacerbating the spread of the virus.

However, a snap YouGov poll conducted on 24 March suggests that the vast majority of people in the UK approve of the new measures, with 93% supporting (76% strongly supporting) the new rules. With such support, risk of domestic unrest or civil disobedience are reduced in the coming weeks, with
increased likelihood that the vast majority of people will adhere to the new rules.

At time of writing on 24 March, the number of confirmed cases of Covid-19 in the UK stands at 6733, with deaths caused by the virus also rising to 335, a six-fold increase on this time last week.

FORECAST

The new containment measures came as the UK Government faced mounting criticism that its containment strategy is falling behind that of the rest of Europe, with most Western European countries having already implemented even more stringent lockdown measures, most notably in Italy, Spain and France.
With signs that deaths caused by the coronavirus in the UK are following those of Italy’s, but with a two-week delay, it remains likely that still further restrictive measures will be introduced in the coming weeks, similar to those implemented by the Italian and Spanish governments. However, the reluctance with which Johnson
introduced yesterday’s measures reflects the UK government’s desires to limit the restrictions as far as is feasible under the circumstances.

Nevertheless, the new measures represent unprecedented disruption to UK businesses, with the effective lockdown and widespread business closures expected to further slow already reduced domestic economic production and demand this year. The UK’s services sector in particular has been hardest hit by the Covid19 outbreak, with the country’s economy contracting at its fastest rate in two decades, driving economic uncertainty. With the forced closure of all non-essential businesses and plummeting consumer demand,
predictions of a recession more damaging than the 2008 financial crash are becoming increasingly more
likely.

©Sibylline Ltd 2020
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