“It looks as though we are approaching the fast growth part of the upward curve.” That was the scene-setting message from prime minister Boris Johnson last night, as he laid out a raft of advisory measures designed to stem the spread of the coronavirus in the UK.
Urging the population to work from home where possible and avoid gatherings in crowded places like pubs and theatres, the PM‘s advice stretched to staying indoors for anyone with a persistent cough or fever, asking others to provide food and essentials.
The most direct measures yet were informed by modelling conducted by Imperial College London, which highlighted the need to move from a stance of mitigation to one of suppression. The models simulated the pressure on the NHS, should the UK start to experience a spread similar to that seen in Italy, where roughly 30% of those hospitalised require intensive care.
The teams at Imperial College and the London School of Hygiene and Tropical Medicine, who currently advise the government, projected a similar trajectory would overwhelm NHS resources even further. Johnson made clear a more pointed UK strategy of containment would involve greater attention to social distancing and self-isolation, with clear knock-on effects for the UK’s hospitality industry.
With current advice being to avoid pubs and restaurants, proprietors are likely to see a steep drop-off in footfall. And as the sector currently contributes £72bn to the UK economy, all eyes will be on Rishi Sunak later as the government announces more financial measures to help during the outbreak.
Crises like these always go through phases - the step up in tackling the spread in the UK follows, and will be followed by, similar reactions around the world. And while there are clear iterative developments in what needs to happen next, what we should focus on is the bigger picture. Seemingly harsher guidelines only seem draconian if we have not readied ourselves for what is likely to happen.
The same is true of financial markets, which have swung majorly recently on the back of daily updates. These swings show the markets are still hoping for a quick and sudden recovery - a likely sign of denial that the virus will not vanish soon. What they also reveal is even clearer evidence of normality bias among investors - this occurs when the status quo is broken in the short-term and all the new unknowns provoke our fight or flight response.
And while the virus’s immediate impact will eventually pass and we will look back knowingly, as investors it is important to look at the current situation objectively, and suppress our own bias.
On building the nation’s herd immunity, England’s deputy chief medical officer Jonathan Van-Tam said: “We can’t say how long this will need to go on for. I don’t know if it could be a year yet. I think we are too far out to make those kind of predictions but I certainly think it could be several months.”
I wrote last week about not falling victim to framing bias and it seems that will continue to be important. We cannot predict the short-term developments but with an eye on the bigger picture, we can ready ourselves for the bumps in the road along the way.
At the very least, we need to accept that what is happening is real. But rather than using that to make short-term rash investment decisions on what we think might happen tomorrow, we can use times as a reminder of the value of long-term views and sticking to them.
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Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest