Holiday quarantines mean unforeseen consequences
How was the holiday in Spain then? The sudden requirement for people coming or returning from Spain to self-quarantine for two weeks is one of those blows that we will have to become used to for several months yet. It might seem arbitrary, for while there are outbreaks of Covid-19 in some parts of Spain, including Barcelona, other regions seem reasonably clear. But this is the reality of the world.
Melbourne, Australia’s second largest city, is three weeks into a six-week lockdown after a second wave of
the virus broke out. On Saturday, Luxembourg had to tighten its restrictions in the face of another outbreak. In the US, which has adopted a piecemeal and sometimes confusing approach, there has been a shift in policy in different states as cases and deaths have surged and waned.
All this is deeply distressing from a personal perspective and deeply disruptive from an economic one. Holiday quarantines are one thing, and people are understandably infuriated. But let’s remember the pain from the travel barriers go far beyond that. There are families unable to reunite as a result of being on different sides of the Atlantic. There are universities wondering whether half their international students will be able to take up their studies this autumn. And school closures have put tremendous pressures of many families, with – such is the way of the world – much of the burden falling on mothers. It is monstrously unfair.
We should strive against making snap judgements either about the effectiveness of government responses or about our wider societal responses. The situation is and will remain fluid through the autumn. There is a general perception in the UK and elsewhere that it is risky to open up too fast. That’s true, but keeping things clamped down is not sustainable politically, as we have seen from the parties that have burst out across the land.
In any democracy a government has to persuade that what it is doing is thoughtful and measured. It also has to be honest both about uncertainties, which is not easy because human being are not good at understanding risks, and about the real progress being made in public health outcomes.
For example, how many people are aware that despite the continuing toll from the virus, overall deaths in the UK are now running well below the five-year average? Getting that message across that there is progress, but also trying to push us all to be vigilant about things that will matter as we head into the autumn, such as protecting the most vulnerable, is going to be difficult. The confusion will continue.
Maybe people will use holiday money to pay off debts, with the result many families will emerge from all this in a more robust financial position. We just don’t know
What has, however, become much clearer is the world’s economic response to all this. We know we are through the worst. The upturn began around the end of February in China, moving through Europe, reaching the UK in late April, and taking hold in the US in May. There is a debate now as to whether continental Europe will stage a faster recovery than the UK and US.
I think the jury is out on that one. People should resist projecting their political views about government competence onto economies’ relative economic performance. The links are too loose and the lags are too long. What we can be sure about, though, is that now the initial bounce off the bottom is secure, the pull out of the dip will be an uneven, two steps forward, one step back affair.
The reason for this has little to do with macro-economic demand and much to do with the massive structural shifts happening across the world. Come back to the UK’s sudden quarantine imposed on people from Spain. At the margin, some people who had planned to go there will no longer do so. We can be sure of that, though we don’t know how many. But there will be other knock-on effects that we can only guess at.
Maybe other quite unrelated foreign trips will be cancelled. Maybe more money will be spent on something quite different – another boost to spending on home improvements, for example. Maybe more people will save the money and go skiing next winter. Maybe they will simply use the money to pay off debts, with the result that many families will emerge from all this in a much more robust financial position. We just don’t
know.
The economic models can catch nothing of this. They can only be based on past data. Now there is no relevant data because the world has never had this experience before. If you are an optimist, and I confess to that, it is inevitable that we will emerge with a more resilient world economy in thousands of ways.
We may travel a bit less, but we will have more solid values. But I appreciate it is rough on people who thought that once the corner had been turned they could go off for a holiday to Spain (or Florida, or Bali, or wherever) without any worries. The world is not through this one yet.