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Coronavirus: UK/EMEA Weekly Update – Call Briefing and Recording from 6.3.20

June 3, 2020

Below please find key take-outs from our June 3rd senior panel with William J. Bratton, Executive Chairman of Teneo’s Risk Advisory Practice and twice former Police Commissioner of New York; Deborah Mattinson, Founding Partner of BritainThinks, Amber Rudd, Teneo Senior Adviser and former Home Secretary and Wolfango Piccoli, Co-President of Teneo’s Risk Practice and chaired by Principal of Teneo’s Situations and Politics practice and former Downing Street Director of Politics and Communications, Craig Oliver.

 

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The 'Great Divide'
  • The US has never experienced the multitude of issues that are impacting the country at this time.
  • As the pandemic continues to sweep the country, the economic impact of the crisis in the US has been devastating. In the last labour count, 40 million Americans have applied for unemployment, and 40 per cent of those earning $40,000 or less have either lost their jobs or been furloughed.
  • Meanwhile, the rich are getting richer. This week, Amazon was able to rise $10 billion in corporate debt markets, including a $1 billion bond yielding just 0.4%. The crisis has not proven itself to be the ‘great equaliser.
  • Now, the tragic circumstances of the murder of George Floyd have unleashed an unfolding drama in the US in which citizens across the country have poured into streets of the country’s most iconic cities demanding justice, after 400 years of ongoing civil injustice.
  • Not since the civil war has the country been so divided. Today, the United States are essentially 50 States attempting to deal with the virus, the economy and the effects of violence at the same time.
  • Meanwhile, all of the cautions of the COVID 19 virus have been thrown into the wind during protests and experts are expressing concern that the US could see an earlier wave than predicted.
  • Public disorder is beginning to dissipate, but the unique nature of current events makes it difficult to predict what the next few days, weeks and months will look like.
  • Ultimately, only time will tell what impact the last few months have had on President Trump’s ratings. So far, he has shown no sign of backing down on his rhetoric and approach.
  • There is no doubt he will be judged very seriously on his handling of the current situation, and we will see the results of this during the election.
Wavering Trust in Government
  • Meanwhile, in the UK, there are similar levels of distrust in the government, and the nation’s mood has never been so volatile.
  • What started off as fear and boredom at the start of lockdown has transcended into anger, with the Dominic Cummings affair acting as a lightning rod for public unrest.
  • It speaks to an unnerving truth that there is one rule for the government, and one rule for the nation. People are angry but they are also disappointed and that has worrying implications for the government. This was demonstrated by a recent 16% drop in government approval ratings in a single day.
  • The nature of Covid 19 is that as we begin to emerge from the crisis, the evidence of the government’s handling of the situation will be as clear as day: in the numbers, and in the death toll. The government has made undoubted mistakes in its handling of the pandemic, and the numbers give Boris Johnson nowhere to hide. The public will not be forgiving if it does not learn from these mistakes.
  • There is also a growing feeling that other countries and other leaders, in particular female leaders especially New Zealand and Germany are handling this crisis better. That has compounded a loss of trust in Boris Johnson, who has been invisible in recent weeks.
  • It is an uncomfortable truth for the Conservatives, and for patriotic red wall voters, whom the Party’s 80 strong majority is dependent on.
A Path to Recovery
  • But there is cause for some optimism. The Chancellor, Rishi Sunak, continues to do well and is currently the most popular politician in the UK, with political capital to play with. The Treasury’s furlough scheme and ability to flex throughout the crisis has been broadly lauded and is the current saving grace of the government’s response to Covid-19.
  • In July, the UK government will be making an ambitious proposal for fiscal stimulus which will be focused on a green recovery. This is sensible, not just because many of us believe it is the right thing to do, but because it will give Government the high ground and help it justify an expansion in infrastructure spending. It will also give Government the option to look at potential ‘sin areas’, like frequent flyer point systems.
  • A similar rhetoric is emerging across Europe. President Macron has told Air France that he will only support a bailout it if makes bolder commitments to becoming greener. Meanwhile, the European Union’s proposed €750 billion fund to help the bloc recover from the coronavirus crisis will have green strings attached, with 25% of all funding set aside for climate action.
  • Although US-China relations are at an all-time low, we should also take concerns around deglobalisation with a pinch of salt. While the crisis is increasing inequalities between countries, international institutions and central banks have stepped up to the plate and capital controls have been limited.
The Politicisation of the COVID-19 Debate
  • Of course, many unknowns remain, largely because this crisis has been so unprecedented, both in terms of its global nature, with 188 countries with reported cases, and the reach the economic crisis is having.
  • As such, this is an open-ended crisis, where no-one has been able to predict which area or continent will be affected next or which country will handle it best. Vietnam, for example, has recorded no COVID-19 related deaths, whilst the US, with the highest health expenditure per capita in the world, has recorded more than 1.8 million cases of infections and over 100,000 deaths (the second greatest number of reported cases is in Brazil, with just over 500,000).
  • There are several other unknowns. For example, as schools begin to re-open, we are still unclear of the role of children in transmission and on how they themselves are affected by the virus.
  • The science remains extremely complicated and it is far too early to get a sense of the possible impact of recent Government decision making, including whether we will see second waves across the globe.
  • The danger becomes that as time goes on, and the science continues to take time, the void becomes filled with misinformation and the debate becomes increasingly politicised. Recent protests in Italy, involving thousands of people accusing the virus of being a conspiracy plotted by George Soros and Bill Gates, are just the tip of the iceberg.
  • Political instability is getting worse, and history has taught us protests tend to intensify during periods of economic recovery. If we expect there to be some recovery in the second half of the year, then this is something we could see more of.
The views and opinions in these articles are solely of the authors and do not necessarily reflect those of Teneo. They are offered to stimulate thought and discussion and not as legal, financial, accounting, tax or other professional advice or counsel.

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