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Deloitte maps out Europe’s easing of lockdown restrictions

30 April 2020: the latest weekly COVID-19 update from Deloitte explored the partial easing of lockdown restrictions in several European economies and examined the global impact of the collapse in oil prices.

Ian Stewart, Deloitte’s chief economist, looked at the emerging lockdown measures in five countries: Italy, France, Spain, Austria and the UK.

He compared the number of days between the peak of the pandemic in each country to the start of their respective easing of restrictions, which ranged from 11 days in Italy up to 31 days for France.

Italy began its lockdown easing with bookshops, while Spain began with its construction and manufacturing sectors. France will start with its school and wider workplaces on 11 May, while Austria has already re-opened its garden centres and small shops.

The UK’s next review is scheduled for 7 May, with “what appears to be widespread agreement” that the peak of the virus in the UK was reached on 8 April.

When looking at the UK population by age cohort and then the number of COVID-19-related deaths per million within the working-age population (even though not all would be working) that segment accounted for 13% of all cases, a death rate per million is 42 on average, “with an extremely low rate for those aged under around 40”. 

“Sadly, the death rate among the non-working age population is about 22 times higher,” said Stewart. He also raised a paper published by Warwick University recently which suggested scope for an age-related easing – with the authors suggesting that under-30s who live alone “might be allowed out first”.

However, the scale of any recovery will be “contingent upon the easing of constrictions, the damage to the economy and people’s willingness to actually take advantage of an easing of restrictions”, said Stewart.

He pointed to a recent YouGov poll that suggested there is “likely to be a high level of concern” about using facilities like gyms or bars after lockdown, “so I think that sort of human dimension is very important indeed in this debate”.

Problematic pipeline for the oil industry

Stewart dubbed the recent drama unfolding in the global oil market as an “astonishing story”.

It was a week that saw the US benchmark oil price – the WTI – for respective intermediate May contracts nosedive into negative territory to a point where “producers were paying consumers $37 a barrel to take this stuff off their hands”. Such a scenario “reflected a collision of too much production, collapsing demand and a lack of storage capacity”.

A similar tale was also being played out in terms of “soaring rates for very large crude tankers – the main seaborn form of carriage with prices in that market having risen 15 fold over the last year”, probably driven by producers attempting to “get hold of tankers for storage space”, explained Stewart.

While oil prices had picked up marginally, it has “taken a huge knock”, down 70% year on year and trading near a 20-year low. 

This caused further ramifications and increased pressure on those emerging market economies which are highly reliant on oil, fuelling additional problems for their less-developed healthcare systems and raising finances in international markets. 

Such a scenario was also “hugely bad news for the US shale industry” while also creating risks for the financial sector due to its exposure to high leverage and indebtedness levels.

For additional insights into coronavirus (COVID-19) and Europe, please access the latest updates on the ICAEW hub.