(Greenwich Merchant Bank): The new strain of COVID-19 is gaining prominence since its first detection in Britain on the 20th of September 2020, and it has now been confirmed in Australia, Italy, the Netherlands, Iceland, South Africa, and Denmark.
This new variant retains its human lethality, and according to the UK Prime Minister and his chief scientific adviser, it has a significant transmission rate of 70%.
Hence, its increased spread has pushed up the total number of globally recorded cases to 78 million with 1.72 million casualties, as reported by Johns Hopkins University Center for Systems Science and Engineering.
As at the 9th of December 2020, 62% of cases in London were due to the new variant when compared to 28% of cases, three weeks earlier recorded.
On the back of this resurging strain, the UK government has imposed tighter COVID-19 restrictions measures this festive season, particularly in London and Southeast England where the cases appear to be more profound.
In response to the sweeping spread of this mutating virus, and with the aim of breaking the chain of transmission, more than 40 countries, have since the 20th of December 2020, cut off transportation links by imposing border closure actions as well as banning of flights to and from the UK.
Other countries have since towed the same line by restricting flights from South-Africa, the Netherlands, and Denmark.
Surprisingly, with about 18.3 million recorded cases and 323,000 causalities in the United States, this new strain has not yet been detected. The Centers for Disease Control and Prevention (CDC) has however stated that it could already be in circulation within the US, but undetected.
On the other hand, in South Africa, there has been an upsurge in the number of recorded cases to 940,000 as the new COVID-19 strain similar to the UK variant has been confirmed.
The new COVID-19 strain also raises concern about the effectiveness of the testing, as it has been posited by some scientists that it has affected the ability of some tests to detect the virus. Nevertheless, with respect to the impact of the new variant on vaccines, experts opined that Pfizer’s and Moderna’s COVID-19 shots would protect against this new mutation, as it has yet no known impact on the vaccines.
Even as the Brexit trade deal was sealed between the UK and the European Union today, the 24th of December 2020 with the new arrangements coming into force on the 1st of January 2021, it is still anticipated that despite the trickles of growth recorded in previous quarters, the UK may close out the year gloomy as the nation slides into this precarious phase of the COVID-19 pandemic with trade activities being mostly impaired.
This is in line with the outcomes reached at the recently concluded Bank of England’s Monetary Policy Committee (MPC) meeting held on the 16th of December 2020, where the Committee reviewed its previous forecast where in it projected that the UK’s GDP would decline in Q4:2020 and then pick up as restrictions were assumed to loosen.
However, in view of the recent developments, the MPC has projected that UK’s GDP would be weaker-than-expected in Q4:2020 and its uptick is dependent on an assortment of conditions such as the evolution of the pandemic, measures taken to protect public health, transition to the new trading arrangements and the responses of households, businesses, and financial markets to these developments.
Furthermore, the MPC’s decision further confirms the International Monetary Fund’s forecast in October, where the UK GDP was projected to contract by 10.4% in 2020 and then grow by 5.7% in 2021. Thus, the growth prospect of UK and other affected economies remains choppy.