Why the Lockdown?

The number of coronavirus cases in the United Kingdom is showing a huge spike. As of October 15th, the country has recorded more than 6,57,000 cases of Covid-19, with 43,245 related deaths, as per official data compiled by John Hopkins University. The infection rates are increasing, with the number of cases doubling every 10 days.

Graph showing the rise in Covid-19 cases in the United Kingdom

In order to contain the spread of the virus, The UK Government has introduced ‘Local Covid Alert Levels’ in the country. There would be three levels- medium, high, and very high. Most parts of the country are under a medium alert of Tier-1. As of October 16th, the capital city of London will see a shift to the second-highest coronavirus risk tier. This would mean that millions of people in the city will be unable to meet anybody outside their household, whether at home or in public. Other areas such as Manchester, Nottingham, and Newcastle are some of the worst-hit areas. These cities could be upgraded to Tier-3 (highest alert level) at any given time.

What does it mean?

The rules and regulations under the Tier-2 lockdown are as follows:

  • Not more than 6 people will be allowed to gather outside
  • Schools, universities will remain open.
  • Indoor gatherings will not be permitted. As per the current rules, people are not allowed to meet anyone else other than family members.
  • Indoor sport and exercise classes can take place, but with not more than six people at a time.
  • Weddings or funerals can be attended by a maximum of 15-30 people.
  • People are advised to reduce the number of journeys, if possible. Walking or cycling has been encouraged.
  • Businesses can continue to operate, under Covid-secure conditions.

In case any of these rules are broken by citizens, the police will be able to take action and issue fines. If a person is organizing an illegal gathering, he or she could be fined up to £10,000 (~Rs 9.46 lakh). In his message to the people of London, the UK Health Secretary said: “Thank you for what you’ve done to suppress this virus once. We all need to play our part in getting the virus under control once again.”

What do we understand?

From what we can understand, these restrictions have caused a lot of panic and confusion amongst the people in London, as well as those in other cities. They have not been able to find a clear difference between the rules for Tier-2 and Tier-3 alerts. The rules do not seem to be strict, and have a lot of loopholes in them. In between all this confusion, it has been estimated that most small businesses would be hit, as the number of people visiting small shops or restaurants will further reduce. Also, businesses in Tier-2 regions will not be eligible for government support, as only those businesses in regions imposed with a Tier-3 alert can claim it. 

On October 15th, we saw that the global markets took a big hit, as these lockdown rules were announced. This was one of the major reasons why Indian markets fell that day. When European Markets opened with a huge gap-down, panic selling started in the already bearish Indian market. However, this sentiment seems to have been short-lived as global markets have recovered after knowing the lockdown is not that serious. 

But, do watch out if a shift to Tier-3 lockdown is announced in London. After the Covid crash, world markets have recovered partly because lockdown restrictions have lifted and economic activity has restarted. If nations are forced to re-introduce lockdowns, stock markets won’t be happy.