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Coronavirus fatality rates are way down – why has the government not taken this on board?

Coronavirus fatality rates are way down – why has the government not taken this on board?

King Canute has had a bad press. The monarch sat on the beach on his throne with the deliberate intention of demonstrating to his courtiers that he could not stop the waves from coming in.

But in popular thinking, he is the deranged king who believed he could control the sea.

In this spirit, step forward two modern Queen Canutes, Nicola Sturgeon and Jacinda Ardern of New Zealand. Both appear to think they can eliminate Covid-19.

Our own Matt Hancock is showing dangerous signs of succumbing to this syndrome.

On a more sober note, it is certainly true that new cases are rising not just in the UK but across Europe – except in Sweden.

But there are major differences between this wave of infections and that experienced in March and April.

The key question is not really how many people might get Covid-19. It is how many might die as a result. In the jargon, this is the case fatality rate (CFR), the probability of dying from the disease if you catch it.

As ever, the Oxford Centre for Evidence Based Medicine is a font of wisdom.

A month ago, the Oxford researchers showed that in the UK the CFR had fallen from six per cent in the summer to just 1.5 per cent.

This could of course be due in whole or in part to the fact that the majority of infections are now in the young, who are at essentially no risk at all themselves.

But the Oxford group showed last week that something even more important is going on. They analysed data from Germany, which is more detailed and specific in terms of ages than in the UK. The results are striking.

In the 60 to 79 age group, in the March and April period the CFR was nine per cent. By July and August this had fallen to just two per cent.

In the very vulnerable group of the over 80s, in March and April the CFR was a frightening 29 per cent. By July and August this was down to 11 per cent.

So deaths remain very low not just because it is mainly the young now catching Covid-19 or because the elderly are shielding. Both of these are true.

More fundamentally, fatality rates amongst those who actually have the virus have fallen sharply. Treatment has improved. Social distancing means less strong doses are being caught. Whatever the reason, CFR is down.

Government advisors and health care professionals appear not to have taken this on board. They speak and act as if a second wave will be as lethal as the first.

Some might think they are as mad as the King Canute of popular legend. It is more likely that they are simply suffering from confirmation bias.

This is the tendency to search for, interpret, and recall information in a way that confirms or supports one’s prior beliefs or values.

They have long thought that a second wave would be devastating. The emerging evidence should not be allowed to get in the way of this. Their irrational behaviour is costing us all dearly.

As published in City AM Wednesday 9th September 2020
Image:  Covid Testing by via GiiPe via Wikimedia
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Sweden shows us whether lockdown was worth the economic cost

Sweden shows us whether lockdown was worth the economic cost

Did Sweden get it right in its response to Covid? There is increasing interest in this question.

Contrary to widespread belief, the Swedes did introduce a few legally enforceable restrictions on behaviour. For example, public gatherings of more than 50 people were forbidden in March. Private ones were exempt from the ban.

But, overall, compared to other European countries, Sweden had effectively no lockdown.

At the start of the outbreak in March, the epidemiologists in the UK were quick off the mark with their dire predictions.

Professor Ferguson and the Imperial College team, in a highly influential paper of 16 March, argued that without any policy changes “we predict approximately 510,000 deaths in Great Britain”.

They also suggested that the peak of mortality would take place after approximately three months.

The peak of mortality was reached after just three weeks, not three months — on 8 April in fact.

A model based on the Imperial one was calibrated on Swedish data in April. The outcome was a prediction of some 80,000 deaths.

To date, the number of deaths in Sweden due to Covid is less than 6,000.

The estimates which emerge from standard models of epidemiology clearly cannot be relied upon.

With Rickard Nyman, a young Swedish computer scientist currently based at UCL, I have compared the trajectories of deaths in Sweden and the UK to provide an estimate of how many lives lockdown really did save.

The first death in Sweden was registered on 11 March. On that day, there were seven deaths in England and Wales (EW).  But our population is nearly seven times that of Sweden, so the death series in the two countries start at the same level, adjusting for population size.

The peak death rate was observed in Sweden on exactly the same day as in EW, 8 April.

Further, the paths followed between 11 March and 8 April are almost exactly the same.  For example, deaths reached half their eventual peak value on 1 April in EW and on 31 March in Sweden.

So lockdown had no impact on the build up to the peak.

There is no doubt, however, that the number of deaths fell more sharply here than in Sweden after the maximum level was reached.

Deaths had dropped in EW to half the 8 April peak by the end of April and to only a quarter of the peak by the middle of May. In contrast, in Sweden the “half peak” value was only seen on 12 May, and the quarter by the middle of June.

These differences in the trajectories of the death numbers after their peak in early April tell us how many lives were saved in the UK as a result of lockdown.

It is not 500,000. It is just 20,000, a tiny fraction of the Imperial figure.

So, yes, lockdown did save lives. But the massive economic and social costs, let alone the adverse effect of lockdown on people suffering from other illnesses such as cancer, can hardly be said to justify the saving.

Paul Ormerod
As published in City AM Wednesday 26th August 2020
Image: NHS Heroes by Jernej Furman via Flickr CC BY-SA 2.0
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The costs of lockdown can no longer be justified

The costs of lockdown can no longer be justified

In an otherwise depressing week, two pieces of very good news emerged from India.

In Mumbai, blood tests conducted by the city authorities on 6,936 randomly selected people found that some 40 per cent had coronavirus antibodies. Just 6,000 deaths have been reported so far in a city of 20 million.

A similar exercise in Delhi (population 29 million) found that around a quarter had had the virus. Only 3,300 deaths have been attributed to Covid-19.

Indian experts are clear about what these figures mean. Asymptomatic infections are a high proportion of the total. Further, the virus death rate is “very low”, to quote the Mumbai study.

These studies fit in with a mounting body of evidence that the virus is nowhere near as deadly as first thought. Even the cautious Centers for Disease Control and Prevention (CDC) in America has revised its estimate of the mortality rate down to 0.26 per cent — comparable to a bad influenza year.

Casting our minds back to the middle of March, the picture seemed completely different. Data from Wuhan suggested that the death rate was between three and four per cent. Our television screens were full of images of the health system in northern Italy being overwhelmed.

Given this particular set of information, it was perfectly understandable for the government to impose a lockdown. Behaviour was already changing rapidly in a spontaneous fashion as people voluntarily limited their social contact, but it would still have been very difficult at the time for the government not to take the action it did.

One of the most balanced set of commentaries throughout the whole crisis has been provided by Professor Carl Heneghan and his team at the Oxford University Centre for Evidence Based Medicine.

It was Heneghan, for example, who recently exposed the fact that Public Health England (PHE) did not let anyone recover from Covid-19 — at least not on paper. If you had recovered from the disease and were subsequently killed in a car crash, say, according to PHE data you died from the virus.

The Centre’s work shows that since the week of 14 June, total deaths in England and Wales have been running below their five-year average — despite an apparent upsurge in Covid cases.

Heneghan’s latest research even casts serious doubt on whether the true number of new cases has in fact risen.

On a technical point, the reported number of new cases follows a fairly shallow upward linear trend — not the exponential rise which would characterise a genuine second wave.

His key point, however, is that the number of tests has increased. Once this is taken into account, the rise in cases disappears completely. On the basis of personal knowledge, I can confirm that this seems to have happened in Rochdale in Greater Manchester. The Council installed walk-in test facilities in the town centre. Shortly afterwards, the number of reported new cases rose.

Covid-19 can be highly unpleasant and it retains the capacity to kill, so it is sensible to take precautions to avoid getting it. But the massive costs of lockdown — both economic and social — can no longer be justified.

As published in City AM Wednesday 5th August 2020
Image: Post Lockdown by Bastian Greshake Tzovaras  via Flickr  CC BY-SA 2.0
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The costs of lockdown could far outweigh the benefits

The costs of lockdown could far outweigh the benefits

Radical leaders such as Jacinda Ardern in New Zealand and Nicola Sturgeon in Scotland have gained plaudits through their relentless focus on eliminating Covid-19.

But this comes at an obvious economic cost. Tourism is some 15 per cent of New Zealand’s GDP, and major destinations such as Queenstown in the Southern Alps have been devastated. Here in the UK north of the border, Scottish businesses are increasingly frantic about the economic damage done by the rigorous lockdown.

Health experts and epidemiologists have not helped. They have remained firmly enclosed in their own silos of expertise, unable or unwilling to see the broader picture.

But good policy is not made in a vacuum. A key concept in economics is that of trade-offs.

An obvious health related example is road accidents. As a society, we trade off the 1,800 deaths and 250,000 injuries a year in road accidents against the benefits of using vehicles.

Trade-offs between alternatives have always been central to our economic policy and political debate. Lockdown is no different to any other policy. It has both benefits and costs.

The benefits of lockdown were never in doubt: the policy was intended to save lives. But there is now increasing awareness of the potential economic costs. Ironically, some of those most shrill in favour of lockdown are now crying out for jobs to be saved.

David Miles, an Imperial College economist and former member of the Monetary Policy Committee, along with two medical specialists published last week a valuable assessment of the overall costs and benefits of lockdown.

Miles argues that we must normalise how we view Covid-19. Its costs and risks are comparable to other health problems, such as cancer, heart problems and diabetes, where governments have made resource decisions for decades.

The lockdown is a public health policy, and Miles and his colleagues value its impact using the standard tools developed by the National Institute for Health and Care Excellence to guide healthcare decisions in the UK public health system.

A key concept in this is QALYs — quality of life adjusted years. Essentially, the benefits of any policy in terms of QALYs are compared with its costs.

Economists have developed a broad consensus on the value of saving a single quality of life adjusted year. Macabre though it may seem, some metric like this is necessary in order to have any meaningful assessment of the costs and benefits of different decisions.

Miles’ conclusions are stark. The estimate of lives saved by lockdown in his analysis is deliberately chosen to be the one at the very top end of the range of such estimates. This way, his team cannot be said to be underestimating the benefits of lockdown.

Even so, in the authors’ own words: “we find that having extended the lockdown for as long as three months consistently generates costs that are greater — and often dramatically greater — than likely benefits”.

Gerard Lyons and I warned in early April that, while it was necessary to introduce lockdown, it needed to be relaxed rather swiftly because of the costs it would entail. The work of Miles and his colleagues confirms, in impressive detail, this view.

As published in City AM Wednesday 8th July 2020
Image: Playground by Jlbirman1 via Wikimedia CC BY-SA
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Get the Bank of England focused on the real economy

Get the Bank of England focused on the real economy

Economic policy is returning to its usual position of prominence.

Fears of a major rise in unemployment are starting to worry the government more than fears around Covid-19.

The chancellor’s imaginative schemes concerning furlough and other measures to protect jobs create potential problems elsewhere. So much money is being borrowed that the ratio of public sector debt to GDP has soared above 100 per cent.

The last time we were here was at the end of the Second World War. Then, the debt ratio was a massive 250 per cent.

The Labour government of that time has a reputation for being the most left-wing in British history. It nationalised the mines and railways, and created both the modern welfare state and the NHS.

But it reacted to the massive level of public debt with impeccable orthodoxy. Between 1947 and 1951, Labour ran public sector surpluses to help pay off the debt. These were huge, averaging some £50bn a year at today’s prices.

Will Rishi Sunak be forced into similar levels of austerity, cutting spending and raising taxes?

A timely and fascinating Policy Exchange paper issued last week argues that this would be completely the wrong thing to do. The authors — Gerard Lyons, Warwick Lightfoot and Jan Zeber — are not noted for any previous enthusiasm for fiscal activism, which makes the treatise all the more interesting.

They note that there was a further, perhaps more important, way in which the public debt mountain was brought back under control, in addition to the immediate post-war austerity.

The 1950s and early 1960s saw strong economic growth. A famous phrase coined in 1959 by the then Prime Minister Harold Macmillan was “you’ve never had it so good”.  This, plus a modest rate of inflation, helped erode the debt burden steadily and surely.

The point is that the debt which the government issues is denominated in money terms. If you buy a bond for £100 now and hold it to maturity in 10 years’ time, you get precisely £100 back.

During the 1950s, GDP grew in money terms at an average annual rate of seven per cent. The debt to GDP ratio is, quite simply, the outstanding stock of debt divided by GDP. There was essentially no net addition to debt in this period. But the growth in nominal GDP meant that the ratio was halved.

To tackle today’s debt, Lyons and colleagues call for a strategy of growth. Their most striking demand is to change the remit of the Bank of England from one of controlling inflation to one of controlling GDP in money terms — a combination of inflation and real growth in the economy.

The Federal Reserve in the US is also tasked with taking the real economy — output, jobs — into account, but others such as the European Central Bank remain shackled by a pure inflation target.

This proposal would certainly shake up the Bank of England after years of complacency under Mark Carney. Given the Prime Minister’s new-found interest in the economy, it could be an idea whose time has come.

As published in City AM Wednesday 10th June 2020
Image: Bank of England via Flickr CC BY-ND 2.0
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Covid crisis has exposed the Scottish nationalists once again

Covid crisis has exposed the Scottish nationalists once again

In London, the Covid virus is disappearing rapidly. Hospital trusts are increasingly reporting days with no new cases at all.

During the crisis, there has been a proliferation of home-made signs in rural locations telling city dwellers, with varying degrees of politeness, to turn back and go home. Will we now see messages at junctions with the M25 saying “Yokels, keep out!”?

There is one thing which areas such as Cornwall have been very happy to let in. This is of course the huge subsidies which the regions receive from taxpayers in London and the South East.

This is nowhere more so than Scotland.

Scottish regulations prevent you from travelling more than five miles from home. So English people are effectively banned from entering Scotland. But our money continues to flow across the border.

It is not just that Scotland receives its fair share of the fiscal surplus generated by London. It gets extra special amounts under the so-called Barnett formula, devised by the Labour government of the 1970s in a vain attempt to hold the SNP at bay.

The Covid crisis has ruthlessly exposed the emptiness of the nationalist case for independence.

Before the crisis, the Scottish government ran what was by some margin the largest fiscal deficit in the whole of Europe. Figures produced by the Government Expenditure and Revenue for Scotland showed the nation running a public sector deficit of 7 per cent of GDP.

In the 2014 referendum on Scottish independence, the SNP assumed that much of the gap could be filled by oil revenues. An average oil price of $120 a barrel was assumed, a figure which attracted disbelief at the time. Between 2015 and 2019 the actual average was less than half of this, at $57 a barrel.

During the recent crisis, the price has of course fallen still further, and it is hard to see it getting back even to $60 in a sustained way.

But the overwhelming question is: how would an independent Scotland have paid for the Covid crisis?

UK government borrowing in the month of April was easily the highest on record, at £62 billion. The Bank of England both issued debt and intensified the amounts spent on quantitative easing. So far, the market continue to have confidence, even though the Bank has, in crude terms, been printing large amounts of money.

How would Scotland have met the massive increase in its already large fiscal deficit?

If the country were in the Euro, the European Central Bank would not allow it to print money. If it kept the pound, the same would apply to the Bank of England.

In the financial crisis, as banks such as the Royal Bank of Scotland collapsed, it was the English taxpayer who rescued Scotland.

As Marx said, history repeats itself first as tragedy then as farce. It is a tragedy that once again we have to bail Scotland out. It is a farce that we are not allowed into the country while we do this. Time to call it a day on subsidies for Scotland.

As published in City AM Wednesday 27th May 2020
Image: Scottish Independence via Pixabay
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