Corona Virus Update

Who dropped the Hammer?

12 May 2020

Peter Sleep, Senior Investment Manager

You may be familiar with the Yiddish proverb “Man Plans and God Laughs.” Things never work out quite how you expect and many things are subject to nuance, change, and plain bad luck. Just ask any travel agent, bride-to-be or exam candidate today.

We have talked about the Hammer and the Dance to explain how investors might deal with the coronavirus. Perhaps we underestimated how much of the Dance would also be a political and media Dance that we are witnessing today – with every politician determined to move to their own beat. This has manifested itself in the different approaches adopted in England, Scotland, Wales and Northern Ireland.

The government has spoken about following scientific advice, forgetting that scientific advice is based upon imprecise information and is open to interpretation. This is perfectly normal in academia – but has now resulted in some off-beat notes, which has opened up a political dimension to the Dance, which the media has naturally been quick to jump on.

Devolved differences

The Conservative government has traditionally represented business interests, but it also has a strong libertarian strain within it. It should not therefore surprise us that there is some emphasis on getting back to work, and on taking personal responsibility. This is epitomised by the new slogan of “stay alert”, which is not as prescriptive as “stay at home”. The stay alert advice has been rejected by those in opposition, who have greater faith in the role of the state and who perhaps place greater emphasis on the preservation of life.

The party lines aren’t just in parliament though. Political ideology plus devolution has meant differences in the Dance between England, Scotland, Wales and Northern Ireland (and the Channel Islands who quietly eased their regulations a week earlier). Tory England is easing the rules more, whereas the more centrist governments in Scotland and Wales are taking a stricter line. Northern Ireland’s government is taking a similar stance to Scotland and Wales, but with Arlene Foster of the Unionist Party keen to say that she does not want to be a part of a “nanny state”.

While there is broad agreement that the whole of the UK needs to slowly get back to work and to normal, the variance in efforts to keep new infections low is widening some of the national cracks. The biggest difference is England encouraging people to return to work, where they cannot work from home and where it is safe to do so, whereas the rest of the UK is still in lockdown.

Devolution is a tricky business for Westminster at a time like this. Arguably, a UK-wide policy would be the clearest and easiest message to give. Yet it can’t force devolved governments to Dance to the same tune without impinging their independence. So the lesser evil (for the time being) is having different policies, and accepting that Wales, Scotland and Northern Ireland will be vocal in the press.

Six months ago the Conservatives decisively won the general election, pushed through Brexit and were looking forward to five years of stable government. Today, the government’s leader has just come out of intensive care and has the difficult job of getting us back to work, in the worst peacetime crisis for a century. Wales is putting police on its border with England while Scottish Independence is a talking point once more as the Brexit negotiations continue in the background. It is understandable the UK government are cautious, it can hear God quietly chuckling above.

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The value of your investments and the income from them may go down as well as up, and you could get back less than you invested.
The value of your investments and the income from them may go down as well as up, and you could get back less than you invested.

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