COVID-19 outbreak to last at least until February 2021 

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COVID concern indices are rising again, with personal concern leading with a 7% change. It is headed for territory we last saw during the lockdown. And while respondents in our weekly survey have consistently worried about their jobs and relatives more than their own safety, we believe this uptick marks the end of optimism about reopening the UK and global economies. 
 
 
 

A COVID Christmas is now inevitable  

 
The increase in COVID concerns agrees with infection rate data, which points to the ‘foothill’ of the second wave, as many in our COVID research panel point out. The minimum expected duration of the outbreak has increased by over 11% and stretched to the 30th of January 2021. This means we should prepare for a COVID Christmas. 
 
 
 

Risk perceptions diverge, but that’s part of the problem 

 
Some respondents in our weekly survey are troubled that people in their surroundings think the coronavirus risk has gone away. The UK government suggests that 1,000 new cases per day is an acceptable level, so some feel we understand the virus better now and ‘know the drill.’ 
 
However, localised outbreaks are increasing, and more countries have been added to the UK’s quarantine list. Younger people are accused of not distancing enough and spreading the virus asymptomatically. Some of our respondents complain that face masks are not comfortable to wear in the hot summer days; others question their protective qualities, in spite of growing evidence that they do help reduce the risk of infection. 
 
With UK guidance remaining unclear and incoherent, many find it easier to ignore it. There is no enforcement of rules, nor has there been any penalty for poor COVID-19 hygiene to date. This is making some respondents in our survey question the blanket approach taken, while others point out that guidance cannot be enforced because it is just that – guidance, not law. 
 

Public transport seen as high-risk area 

 
Many in our research panel are avoiding high-risk areas such as shops, restaurants, pubs, bars and beaches. And while a consistent 90% are working predominantly from home, the proportion of those avoiding in-person events has increased from 73% to 85% in just a week. 
 
But what connects these risky areas, figuratively and literally, is public transport – our COVID panel does not wish to use it, and this is the main reason why they prefer working from home and avoiding gatherings. Many expect this to continue well into Q2 next year. 
 

There is uncertainty in the economic outlook 

 
The expected minimum duration of COVID-19’s effects on the global and UK economy has been fluctuating significantly in recent weeks, and double-digit moves have not been uncommon. It has now dropped by 19% compared with last week, but still means the economy will not be on a safe path to recovery until at least early 2023. In fact, studies on economic recovery after the Spanish flu point to four years until economic activity recovers to pre-pandemic levels. 
 
A second wave and renewed lockdown would almost certainly reverse improvements to both market valuations and scheme funding levels, members of our COVID research panel point out. And as changes to everyday life and work will have profound consequences for companies, the biggest macro risk to the pensions industry is sponsor covenants weakening any further. A stable 41% in our weekly survey report a slightly weaker covenant for now, but it is something we are watching closely. 
 
 
 

What are the key risks to the economic recovery post-COVID? Click here to tell us in next week’s survey. 

 
 

Previous articles in this series: 

 
 

About the COVID Concern Index 

 
This short weekly survey helps gauge sentiment of our community on the pandemic. The results are distributed each week via the community newsletter. 
 
The COVID Concern Index values should be used as indication only and do not constitute advice. Their values are bound by the choices available in the survey on which they are based. 
 
COVID Concern Index: 
 
 
Expected minimum duration of outbreak: 
 
 
Expected minimum duration of macro effects: 
 
A methodology change took place on 15/04/2020, affecting data from 21/04/2020 onwards. 
 
Prior to 15/04/2020: 
 
 
Following 15/04/2020: 
 
 
Concerned about the coronavirus outbreak and its macro implications? Click here to take part in the weekly COVID-19 survey. 

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