20 July 2020

Good news on a Covid-19 vaccine and treatments leaves Rishi Sunak with a new challenge

Positive news on the health front may mean the Chancellor opts to revisit his planned withdrawal of economic support.

Britain's Chancellor of the Exchequer Rishi Sunak talks with staff as he visits a Jobcentre Plus in Barking, east London on July 16, 2020. - The number of workers on UK company payrolls slumped by 650,000 during Britain's coronavirus lockdown, official data showed Thursday, with the situation set to worsen as the government pulls support. (Photo by Anthony UPTON / POOL / AFP) (Photo by ANTHONY UPTON/POOL/AFP via Getty Images)

Two major breakthroughs, both made in British universities, have put the world a major step closer to beating coronavirus. Preliminary trials for the University of Oxford’s vaccine project show that it produces a strong immune response and is “well-tolerated”: meaning it produces few notable side effects. Equally importantly, an early trial by a team at the University of Southampton has found that beta-interferon can reduce the severity of Covid-19 in the vast majority of cases.

Taken together, they are hugely hopeful advances that may mean that the novel coronavirus is rendered non-lethal for all but a tiny minority. Palliative treatments are as important as the development of a vaccine, since while some vaccines work in close to 100 per cent of cases, others work less well – and it’s important to be able to prevent the disease as well as treat its symptoms.

Both positive stories raise questions for the UK’s economic response to the coronavirus recession over the coming months. At present, the government plans to withdraw much of its support for businesses and households by the end of October – a sensible timetable if we have to live with the virus for a long time, and if society will have to adjust to a significantly curtailed level of social contact, in which many current businesses will become unviable and new ones will gradually emerge.

But if physical distancing is to be a happily brief phenomenon, either because of the development of a vaccine or palliative treatments, both of which look closer now than they did even a week ago, then the economic case for continuing measures to preserve as much pre-crisis activity in aspic has become considerably stronger. There will be some permanent economic changes, of course, as a result of the trend towards more distanced working among other behavioural changes, but the case for ending the protections extended to businesses and institutions that cannot operate in the era of social distancing, when the prospects for either palliative treatment or a vaccine both look good, is considerably weaker than it appeared on Friday.

The positive news on the health front ought to trigger a revisiting of some of the assumptions underpinning the Chancellor Rishi Sunak’s spending decisions only a few weeks ago.