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Analysis

Why the Covid crisis in UK hospitals is likely to get worse

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The UK’s hospitals are facing a more acute crisis than in the first Covid-19 wave in the spring with many more patients being treated for the virus and, despite the national lockdown, only the faintest glimmers of hope emerge from the latest data that relief might be imminent.

With the NHS struggling, Chris Whitty, England’s chief medical officer, took to the airwaves on Monday to warn that the country was entering the “most dangerous” part of the pandemic and that the “next few weeks are going to be the worst” for the health service.

UK hospitals are some of the fullest in Europe with Covid-19 patients and the authorities’ fear is that, as they fill up further, the quality of care declines, triaging gets stricter and more people die.

The medical officer issued his stark warning because the pathway towards a health emergency from the virus is now well understood. It starts with rising infection rates for the over-60s, progresses to more hospital admissions, then beds fill up, followed by greater use of ventilators and finally more deaths.

There are significant lags in this process, so most of those who are dying from Covid-19 now were infected before Christmas: an intensifying NHS crisis and higher death rates are therefore all but inevitable.

One of the most worrying signs is that as the new, more transmissible variant of coronavirus, first publicly recognised by the government on December 14, becomes the dominant strain, infection rates among older people are continuing to rise.

Line chart of weekly positive Covid-19 cases per 100,000 people showing Infection rates for over 60s have jumped since early December

Across England, case rates for the over-60s, who are most likely to be hospitalised, have more than quadrupled since early December. Although the weekly rate dipped marginally in the most recent data, it was still too early to be called an improving trend, prompting Prof Whitty to urge people to avoid unnecessary contacts.

Infection rates have led to a sharp increase in hospital admissions. In England, the daily number of admissions also quadrupled from early December, peaking on January 6 at 3,967.

Line chart of Covid-19 hospital admissions in England showing daily Covid-19 hospital admissions quadrupled since early December

A drop in the two days after that date was “promising news”, according to Oliver Johnson, director of the Institute for Statistical Science at Bristol university, but also too early to be called a trend.

The problem for hospitals, he added, was that until discharges, which would include deaths, surpassed admissions the number of coronavirus patients in hospitals would continue to rise.

“It may need admissions to fall to the levels of a week or more ago before the total number of beds occupied starts to fall,” Prof Johnson said.

In most NHS regions, hospitals are struggling to cope with this trend and the number of occupied beds is already higher than at the worst point of the spring Covid-19 epidemic.

Chart showing that Covid-19 hospital occupancy is high and rising again in most of the UK, surpassing the spring peak in most areas

In England, the number of people in hospitals with coronavirus is rising at a rate that will be double the peak of the first wave by the end of this weekend.

As the condition of some of the hospitalised patients deteriorates, the demand on intensive care increases, with occupancy rates far above normal levels, as does the demand for mechanical ventilation. This was almost as high on January 9 — at 2,860 people in England — as it was at the spring peak of 2,881 on April 12.

Some hospitals, such as Southend, have started to limit the oxygen available to patients to manage limited supplies, the BBC reported, with managers saying they were “working to manage” a difficult situation.

While the UK is far from alone in having a serious health emergency, the rise of the new strain of Covid-19 has put a greater pressure on hospitals in recent days than in most advanced nations.

Chart showing that UK’s Covid hospital occupancy is now among the highest in the world

Bed occupancy is rising towards the highest in Europe with 50 out of every 100,000 people in the population in hospital with coronavirus and a weekly rate of new admissions rising to 30 per 100,000.

International data shows that the equivalent weekly rate of admissions per 100,000 is only 17 in Denmark, which is high in Europe, 11 in France and nine in the US.

Even though the picture in hospitals emerging from the data is dire, Prof Whitty predicted it would deteriorate further, with vaccination not likely to have a significant effect in relieving the pressure for many weeks.

The UK, he said, was “not anywhere near” achieving herd immunity through vaccination yet.

The new nationwide lockdown rules in England

  • The main restriction is a firm stay-at-home message

  • People are only allowed to leave their home to go to work if they cannot reasonably do so from home, to shop for essential food, medicines and other necessities and to exercise with their household or one other person — once a day and locally

  • The most clinically vulnerable will be asked to shield

  • All colleges and primary and secondary schools will be closed until a review at half-term in mid-February. Vulnerable children and children of critical workers will still be able to attend while nursery provision will remain available

  • University students will have to study from home until at least mid-February

  • Hospitality and non-essential retail will be closed. Takeaway services will be available but not for the sale of alcohol

  • Entertainment venues and animal attractions such as zoos will close. Playgrounds can remain open

  • Places of worship can also stay open but one may attend only with one’s household

  • Indoor and outdoor sports facilities, including courts, gyms, golf courses, swimming pools and riding arenas, will close. Elite sport including the English Premier League will be able to continue

  • Overseas travel will be allowed for “essential” business only 

Full details are available on the government’s official website.



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Analysis

Ronaldo’s Coke moment signals shifting balance of power in sport

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Cristiano Ronaldo’s rejection of strategically placed Coca-Cola bottles at a press conference at the Euro 2020 football championships this week has left sponsors and tournament organisers scrambling to limit the damage on endorsement deals.

The gesture by the Portugal star, who on Monday picked up a bottle of water saying “Agua . . . no Coca-Cola”, was mimicked by other players including Italian midfielder Manuel Locatelli, while France’s Paul Pogba removed a Heineken bottle during media commitments later in the week.

Uefa, European football’s governing body, has contacted national federations to tell teams to avoid actions that could affect tournament sponsors, each of which have paid about $30m to endorse the competition.

But there are no specific rules to police how players must discuss the corporate partners for the Euros. And there has been no reprimand of Ronaldo who, according to one senior European football executive “is so powerful, no one can tell him what to do”. 

That admission is a reflection of the changing power balance at the top of the world’s biggest sports. Highly paid athletes appear more willing to challenge the media and marketing deals struck by the leagues and competitions they play in, if those financial imperatives clash with their own carefully tailored corporate image or sincerely-held beliefs. 

Ronaldo’s viral moment led some media outlets to claim that the incident wiped billions from the market value of the US drinks company. But Coca-Cola’s shares slipped about 1 per cent in morning trade before the press conference even began, a drop that accounts for most of the day’s losses. 

The stock has fallen steadily over the days since, though it managed to recover some ground on Thursday, closing higher for the day at $54.95 .

While Locatelli appeared to be joking by following Ronaldo’s lead, Pogba is a practising Muslim who on Tuesday removed a Heineken bottle placed in front of him at a post-match press conference, though the item was from the Dutch brewers’ line of alcohol-free beers. 

Muslim athletes have cited their religious beliefs for declining to take part in marketing activities with alcoholic drinks brands and gambling groups. “We fully respect everyone’s decision when it comes to their beverage of choice,” said Heineken. 

Last month, Japanese tennis player Naomi Osaka pulled out of the French Open tournament rather than take part in compulsory press conferences, suggesting they were damaging to her mental health. Post-match media access to players is considered key to the value of television deals for tournaments. 

Ronaldo is known for sharing pictures of his intense training regime on Instagram, where he has roughly 300m followers, and has expressed disapproval at his children imbibing fizzy drinks.

Many of his sponsorship deals fit this image of healthy living, such as with sportswear group Nike and nutrition company Herballife — endorsements that have helped him become the first footballer to earn $1bn over his career, according to Forbes. 

However, the player has also previously appeared in adverts for Coca-Cola and Kentucky Fried Chicken.

“I have to say there was a collective raise of eyebrows in the industry about Ronaldo, who has a long record of brand endorsements, some of which don’t fit with his apparent approach to life,” said Tim Crow, a sports marketing expert. “There was a lot of cynicism.”

Ricardo Fort, a former Coca-Cola executive who previously spent nearly two decades managing the company’s sports partnerships, said the incident was an example of rights infringement, with the sponsor potentially entitled to damages. 

Japanese tennis player Naomi Osaka pulled out of the French Open rather than take part in compulsory press conferences © Martin Bureau/AFP via Getty

“Sometimes [rights infringement] can come from a competitor ambushing the event, sometimes it can come from the organisers, sometimes it’s a player,” he said. “In general this is a big distraction for the event and the companies which invested a lot.” 

Though using bottles as product placement is a contractual obligation of the deals that Uefa has struck with Coca-Cola and Heineken, neither brand has demanded compensation, according to a person close to the discussions. 

Uefa said players “can choose their preferred beverage” at the tournament. Coca-Cola did not respond to a request for comment. 

England manager Gareth Southgate defended corporate sponsorships on Thursday, saying “their money at all levels helps sport to function”. That stance was supported by his team’s captain, Harry Kane, who added: “Obviously the sponsors are entitled to do what they want if they’ve paid the money to do so.”

There have long been precedents for athletes favouring their own marketing deals over the groups they play for. At the 1992 Olympics, US basketball player Michael Jordan opted to cover the Reebok logo on his official uniform with a strategically draped American flag, a gesture of loyalty to Jordan’s personal sponsor, Nike.

But more recently athletes have gained greater control over which brands they are associated with, thanks in large part to their direct link to fans through social media. 

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Osaka, the world’s highest-paid female athlete, has accrued a suite of her own sponsors and a large social media following thanks to her brilliant playing record, but also frank advocacy for racial injustice and mental health. 

This breed of independent-minded athletes at the top of sport is forcing a rethink of the longstanding marketing strategies adopted by competition organisers and their sponsors.

“There’s still going to be a billion servings of Coke poured today, tomorrow and the next way,” said Crow. “But the question is: is there a better way of doing it? I suspect there is a better way to get its message across than plonking bottles in front of athletes.”



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Analysis

Biden’s climate agenda bogged down in divided Congress

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President Joe Biden arrives back in the US this week after a foreign tour with a recurring theme: fighting climate change.

But he returns to a Washington where his own party feels increasing anxiety that his administration’s climate agenda will fall short at home.

Bipartisan talks over Biden’s infrastructure proposals — which would spend billions on crumbling roads, bridges and tunnels, as well as record sums on clean energy — are flagging. While Republicans and moderate Democrats try to scale down the package, progressives warn they will withhold support if climate provisions are stripped out. 

“If there is no climate, there is no deal,” Jeff Merkley, a Democratic senator from Oregon, said this week. “When the ship sails on infrastructure, energy infrastructure cannot be left on the docks.”

Democratic party leaders are now exploring another path to enact Biden’s climate plan. Chuck Schumer, the Senate majority leader, on Wednesday met his members on the budget committee to find ways to fund greener electricity, zero-carbon vehicles and manufacturing and farming that keeps many climate goals intact.

While potentially more viable, the strategy could also weaken Biden’s climate policies. Legislation would be shoehorned into the Senate’s budget reconciliation process — a special procedure that enables Democrats to use their slim majority but constrains the scope of what can pass.

Column chart of US generation by fuel source, in a scenario where emissions fall 90 per cent by 2040 (TWh) showing Cutting carbon from electric sector would displace coal and gas

Biden has pledged for the US to cut emissions by at least 50 per cent from 2005 levels by 2030. He is aiming for carbon-free electricity by 2035 — a target that would mean none generated by burning coal or natural gas unless their emissions can be captured.

These lofty climate policies were a centrepiece of Biden’s diplomacy on his first international trip. He told G7 leaders in Cornwall that global warming is “the existential problem facing humanity”, and helped launch a $2bn fund for countries to shift away from coal.

In Washington, however, Democrats look unlikely to pass ambitious climate legislation with the support of Republicans given the 50-50 party split in the Senate and rules requiring at least 60 votes to move most important bills.

“I think there is reason to be concerned,” said Dan Lashof, US director of the World Resources Institute, referring to the fate of climate proposals in Congress.

“It was always going to be a challenge, to get investment at the scale that is needed, to turn the corner on climate change,” he added. “Getting very substantial investments in infrastructure and clean energy technologies is crucial to reaching the US emissions targets.”

The reconciliation process proposed by Schumer requires a simple majority vote, but rules limit it to tax and spending measures. Far-reaching initiatives to drive down the US’s 6.5bn tonnes of annual carbon emissions would be in jeopardy.

Using reconciliation would make it hard to establish a “clean electricity standard,” a core part of Biden’s plans to tackle emissions. The standard would set ever-stricter emissions targets for electric utilities, which are the source of a quarter of the country’s greenhouse gas emissions.

“The clean electricity standard is a much harder provision to enact through reconciliation and the reason is pretty simple: it’s a standard,” said Paul Bledsoe, strategic adviser at the Progressive Policy Institute. “Forcing the square peg of a clean electricity standard into the round opening of the reconciliation process will be very difficult.”

One workaround under discussion among Democrats is to pay incentives for clean electricity, achieving some of the goals of the electricity standard while fitting within the guidelines of reconciliation.

“It would involve the federal government becoming a partner in the transition, helping utilities that are making progress at the pace and scale necessary with financial investments,” said Leah Stokes, an assistant professor of political science at the University of California, Santa Barbara.

Other parts of the Biden climate agenda — including expanding tax credits for wind and solar power and energy storage and creating a credit for power transmission lines — would be more straightforward under the reconciliation process. Policies that do not depend on legislation, such as vehicle emissions rules, can be directly imposed by the Biden administration and are expected soon.

Adding urgency to the legislative push are the midterm elections in 2022, when Democrats risk losing control of the Senate or the House of Representatives.

“The rest of the world is intimately familiar with midterm elections and how the US Senate works, because they are concerned that the domestic delivery of the climate promises is imperilled by the toxic politics here,” said Rachel Kyte, dean of the Fletcher School at Tufts University. 

Republicans have argued that the infrastructure proposals should focus more on roads, bridges, and construction projects and objected to provisions that would subsidise electric cars and support non-fossil energy. 

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Meanwhile, not all Democratic senators are aligned. Joe Manchin of West Virginia, a coal-producing state, is likely to have a decisive influence on the shape of any climate proposals as his vote would be needed to pass bipartisan or reconciliation bills.

Energy experts acknowledge that achieving zero-carbon electricity by 2035 would be daunting even if a clean electricity standard was to pass, because of an ageing US grid. 

Patrick Luckow, analyst at IHS Markit, expects power demand to rapidly increase over the next decade as more vehicles and home heating systems run on electricity. “When you are adding renewable energy and getting rid of fossil fuels, there is demand growth as well, which makes it more challenging,” he said.

Democrats say Biden needs a win on climate for political reasons as much as environmental ones. “The Democrats can’t risk the failure of Biden’s climate and economic policy. It would cripple the president,” Bledsoe said.



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Analysis

Mexico enjoys break from economic gloom with the help of Biden

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Business gloom has been so pervasive in Mexico since Andrés Manuel López Obrador won the presidency in 2018 on a strident anti-establishment platform that a recent burst of optimism about the country’s growth prospects feels like a ray of sunshine breaking through the clouds.

Last October, the IMF was forecasting that Mexico would grow just 3.5 per cent in 2021 after shrinking a seasonally adjusted 8.5 per cent last year during the pandemic. Yet as the economy rapidly opens up, coronavirus infections remain low and the effects of the giant US stimulus ripple across the border, many economists and bankers here now see Mexico expanding almost twice as fast. 

“The combination of continued reopening with strong remittances and a US-led global recovery has allowed Mexico to close the gap with other Latin American economies, outperforming all of them in the first half of 2021,” said Marcos Casarín, chief economist for the region at Oxford Economics. The consultancy’s recovery tracker shows Mexico is returning to pre-pandemic levels of activity more quickly than any other Latin American country.

“Mexico will grow 6.0 per cent this year and it could be higher,” said former finance minister and academic Carlos Urzúa, citing the spillover effects of US fiscal stimulus and increased remittances from Mexicans working across the border. These could reach $55bn this year and are “much more important than oil”, he added.

But few believe this year’s US-inspired growth spurt heralds a bright new dawn for Mexico. The expansion, bankers and economists say, is almost entirely thanks to President Joe Biden’s policies, rather than López Obrador’s. The biggest beneficiaries are Mexico’s export-oriented manufacturing companies in the north of the country and the tourism industry, while firms servicing the domestic market struggle with depressed demand.

“Mexico will grow 6 per cent this year whether it likes it or not, dragged along by the US,” said one dealmaker who runs an investment fund in the country. “It will grow quite well in 2022 also. That’s not the point. What matters is what happens after 2023.”

Here the picture is much less sunny. A near-universal complaint in the business community is that López Obrador’s hostile rhetoric, constant attacks on regulators and the judiciary, his unpredictable policy announcements and preference for state-owned companies have scared away the foreign money that should be coming to Mexico to take advantage of preferential access under the US-Mexico-Canada free trade agreement.

“The ritual of bringing the global CEO to Mexico to announce a new investment is over,” said one leading member of the international business community. “There is a pause. Nobody is leaving the country but nobody is proposing incremental investment either.”

The example cited most often as deterring investors is the energy sector, where López Obrador is attempting to reverse an opening to private money begun under his predecessor and revert to a state-run fossil fuelled model, throttling a once-promising renewable energy boom in the process.

“The problem is investment and the issue is medium-term and long-term,” said Gerardo Esquivel, deputy governor of the central bank. “It’s been stagnant since 2015-16.”

Urzúa said that public investment would be only 2.7 per cent of gross domestic product this year, barely more than half the level it should run at. Much of the spending is directed towards López Obrador’s pet projects, which include a new oil refinery in his home state of Tabasco and a new tourist railway around the Yucatán peninsula.

Despite his government’s focus on social programmes to help the poor, López Obrador stands out from other populists for his stubborn refusal to increase borrowing to allow more spending. Most economists here do not believe that his decision last week to switch finance minister and appoint longtime ally Rogelio Ramírez de la O, 72, will change this.

Those close to the president say his aversion to debt stems from a conviction that the Mexican governments he admires most in the 1960s and 1970s were crippled by excessive borrowing. “Amlo turns into a panther when you suggest that he should take on more debt,” said one former minister. “It’s simply not something you can discuss. He will not spend.”

Even amid the pandemic, López Obrador was one of the very few presidents in the world to reject extra borrowing to alleviate suffering, despite the fact that Mexico had the fiscal space to do so. Critics dubbed his policies “austericide”. And while public investment remains weak, the president does little to encourage the private sector to take up the slack.

“López Obrador must promote private sector investment,” said the CEO of one Mexican bank, adding that the private sector accounted for 86 per cent of Mexico’s total investment. “There is no way to grow without private investment. “This rejection of private investment has to stop.”

And as for Mexico’s recovery: “To grow 6 per cent this year and 3.5 next year is not magic, it is inertia.”



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