Omicron becomes a blessing in disguise for Britain’s economic recovery


Boris Johnson may feel he has little choice when deciding whether to ditch Plan B.

Just as persuasive as the extremely positive omicron data coming out of UK hospitals is a need for Johnson to placate furious Tory MPs after the latest and most damaging episode of ‘Partygate’.

The anti-lockdown Covid Recovery Group of Conservative MPs have made clear they will not accept anything less than zero restrictions by the end of January as the PM’s future hangs in the balance.

“We need a ‘learn to live with it day’,” says Mark Harper, the Tory MP who chairs the group.

“As we head into what will be a difficult few months for many, a great way to help people with the cost of living would be to get the economy motoring. That starts by removing Plan B Covid restrictions.”

Steve Baker, fellow Tory MP and the group’s deputy chairman, adds that “opposition to Plan B will only have grown by the end of January”.

Whatever the Prime Minister’s motivations, an end to vaccine passes and, in particular, homeworking advice will be a big step towards finally reaching economic normality.

Despite rising cases, “omicronomics” offers global leaders a tantalising scenario where the strain becomes a blessing in disguise for the economy – setting a ceiling for restrictions and restoring business and household confidence. Forecasters believe it gives the global economy a way out of the pandemic.

The new variant has broken the link between cases and deaths. Ministers in the UK and Spain are starting to talk up the prospect of Covid moving from a pandemic to endemic, where the virus persistently circulates at low or moderate levels and becomes a problem more akin to the flu.

Optimism is building among global forecasters that a light at the end of the tunnel is nearing, with one bullish Wall Street analyst telling investors it is “darkest before dawn”.

Removing the threat of lockdown would finally offer enough certainty to allow businesses to kickstart investment and the UK’s consumers to finally unleash £260bn in lockdown savings.

“For the first time, there’s a genuine end game that I think is emerging,” says Sanjay Raja, UK economist at Deutsche Bank.

“As the economy starts to move on from the pandemic, this could breathe new life into private sector capital expenditure plans going forward. Omicron may be the tide in terms of moving to the new normal.”

Economic forecasters as well as epidemiologists are poring over data from the UK, the first developed economy and vaccinated population to face the variant. It appears to confirm positive signs in South Africa where its younger and earlier infected population had left lingering doubts on the severity of omicron.

While official cases peaked at near 250,000 a day in Britain, daily hospitalisations have plateaued at half of last winter’s high and deaths are still a fraction of last January’s grim toll.

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