UK could lift COVID rules and exit third lockdown in May

• UK Prime Minister Boris Johnson to make an announcement on new COVID rules on February 22nd
• Schools in Britain expected to reopen on March 8th
• NHS bosses urge the UK government to take a cautious approach when easing lockdown restrictions
• British pound to euro (GBP/EUR) exchange rate rallies to ten-month best

UK Prime Minister Boris Johnson imposed a third national lockdown in England in January, after the four-tier system failed to stem the rapid spreading of COVID-19.

Under the latest COVID rules, Brits can only leave their home for essential reasons such as grocery shopping and exercise. Simultaneously, schools, non-essential businesses, leisure and entertainment venues remain closed.

However, with the UK’s rapid vaccine programme on track to achieve its target to vaccinate 15 million of Britain’s most vulnerable people by mid-February, many are hopeful that this lockdown will be the last.

Although the same cannot be said about the EU, which continues to wrestle with rising coronavirus cases. The EU economy is already weak, but many economists forecast further weakness amid lockdown extensions and the EU’s laggard vaccine rollout.

However, France has dismissed the idea of a third lockdown as the “economic, social and human” costs can’t be justified, says Prime Minister Jean Castex.

While France’s daily coronavirus case count is lower than the UK’s, recent evidence shows that the country’s infection rate is rising, compared to Britain, which is now believed to be past the peak of the second wave.

During a televised COVID press conference, England’s Chief Medical Officer, Professor Chris Whitty, said the UK had turned the tide on the current coronavirus wave, with cases, hospitalisations and deaths now following a “downward slope”.

Meanwhile, more than 10 million Brits have received their first coronavirus vaccine, boosting hopes of lockdown restrictions being eased from March.

If the UK’s vaccine rollout maintains its rapid pace, the British government hopes that the entire adult population could be vaccinated by autumn.

However, we will not have to wait until autumn for COVID rules to be lifted, with UK Prime Minister Boris Johnson offering March 8th as the date for which coronavirus restrictions will start being eased.

That being said, the government said they would be taking a more cautious approach in 2021, referencing the spike in cases following the November lockdown due to measures being lifted under a tiered system.

Downing Street has also refused to dismiss the possibility that COVID rules could continue into the summer months, saying that scientific data would guide the easing of lockdown measures.

While the infection rate is declining, Professor Chris Whitty said the NHS is still under an overwhelming amount of pressure and that lockdown restrictions were likely to remain in place until all over-50s have been inoculated.

While the UK government is yet to publish the lockdown exit roadmap, Mr Johnson said they would be scrapping the tiered system and lifting restrictions on a national basis rather than a regional process.

Boris Johnson also said that lockdown measures would remain in place until the UK’s top nine priority groups have been vaccinated, approximately 30 million people.

When is the next lockdown review?

Prime Minister Boris Johnson is scheduled to announce new COVID rules in the week commencing February 22nd, a week after all of the UK’s most vulnerable people should be vaccinated.

According to Mr Johnson, the UK government will know “more about the effect of vaccines at this point, using data from the UK but also other nations like Israel.”

He added, “we will also know how many people are in hospital with Covid – which we cannot currently predict, which will reduce the risk of another wave overwhelming the NHS.”

While much remains uncertain, Mr Johnson suggested that lockdown restrictions were likely to stay in place until March 8th at the earliest, the point at which the UK government plans to reopen schools and other educational institutions.

However, given the Prime Minister’s announcement in Wednesday’s COVID press conference, there will not be a complete relaxation of COVID rules until summer, which is when Downing Street hopes that all those over 50 have received their vaccines.

Mr Johnson also said outdoor sports and social contact would be among the first activities to be permitted following the reopening of schools if the scientific data supports.

Boris Johnson will prioritise outdoor contact after easing COVID rules

According to The Times, Boris Johnson’s lockdown exit plan will prioritise open-air contact and outdoor activity after reopening schools.

With pubs, restaurants and bars likely to remain closed for several months, Boris Johnson could permit socialising outdoors and sports in small groups.

While the plans are “tentative” Boris Johnson has recognised the negative impact lockdown has had on people’s mental health, with recent data from the Office for National Statistics (ONS) showing the number of people suffering depression has doubled.

On this view, outdoor markets are more likely to open before non-essential stores and restaurants.

The Prime Minister is also considering changing the rules on alcoholic drinks by allowing the public to enjoy a drink without needing to purchase a substantial meal.

While socialising outdoors and sports will only be permitted if scientific data supports this reasoning, it’s plausible due to the UK’s world-leading vaccine programme.

Not only is the UK on track to vaccinate all adults by August 14th but scientists have said Britain could achieve herd immunity as early as July – allowing the country to turn its back on the pandemic.

Meanwhile, scientific adviser to the British government, Andrew Hayward suggested that a gradual easing of restrictions could see the UK make a “significant return to normality” by summer 2021.

However, several experts and MPs, including Labour leader, Sir Keir Starmer, have urged caution. Sir Keir asked Boris Johnson “not to repeat the mistakes of last time” so that we can ensure the current lockdown will be the last.

NHS bosses urge UK government to lift lockdown restrictions with caution

NHS Providers chief executive, Chris Hopson, has urged UK ministers to adopt a cautious approach to lifting lockdown restrictions as hospitals are still inundated with coronavirus patients.

While the number of COVID patients in ICU is declining, albeit, at a slow place, he said the NHS remains swamped with cases as more than 25,000 people are battling the virus in hospitals – a 40% increase on peak levels seen during the first wave last March.

Former Health Secretary and NHS Providers Chair of the Health and Social Care Committee, Jeremy Hunt, has also warned ministers against easing COVID rules prematurely.

During an interview with the Guardian, Jeremy Hunt said Prime Minister Boris Johnson should subdue COVID enough to allow a “South Korean-style approach” of intensive contact tracing, which would keep some restrictions in place for an extended period.

Mr Hunt insisted that the UK must be more careful following the spike during the Christmas period and ongoing reports of new variants emerging worldwide.

However, the Chair of the Covid Recovery Group, Mark Harper, told the BBC that the UK government could scrap all COVID rules by May-end if they get the UK’s top nine priority groups vaccinated by that time.

Mr Harper said: “Once you’ve done the top nine groups – that’s 99% of deaths and over 80% of hospitalisations – that’s the point at which you can get rid of restrictions completely”.

Financial markets reacted positively to the news, which has added to the Bank of England’s (BoE) upbeat assessment for the UK economy.

Policymakers unanimously voted to leave interest rates unchanged at 0.1%, assuming that the UK’s vaccine programme would trigger a swift economic recovery in the country, which, in turn, pushed pound Sterling (GBP) exchange rates higher.

GBP/EUR exchange rate rallies to ten-month best

Pound Sterling (GBP) extended its winning streak after the Bank of England (BoE) said negative interest rates would not be implemented in the near-term due to the UK’s rapid vaccine rollout.

The British pound to euro (GBP/EUR) exchange rate rallied to its highest level in over nine months in the wake of the news and has continued to advance since.

GBP/EUR is currently trading at its best levels since May 2020 at EUR 1.1443, and it could maintain the uptrend if the UK’s vaccine programme results in a swift unlocking of the economy.

Although the BoE revised its forecast for Q1 2021, noting that the third national lockdown will likely trigger an economic contraction of 4%, investors appeared to overlook the development due to the upbeat outlook for the second half of the year.

The euro (EUR), however, could remain under pressure for some time due to the EU’s notably slow vaccine rollout, a stronger US dollar (USD) and the European Central Bank’s (ECB) negative rate offering.