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Analysis

Third Covid wave pushes Poland’s health system to limits

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After Michal Drozdz, a Warsaw paramedic, pulls up outside a hospital, his ambulance often has to queue for hours before his patients are admitted.

“This has been happening all the time for three weeks. Every shift there’s a real threat you’ll have to spend it waiting in front of a hospital,” he said. “Sometimes it’s two hours, sometimes six . . . During that time you can’t help anyone, which is what this job should be about.”

It is not just Warsaw that is struggling. Across Poland, the health system has been brought close to its limits as the central European nation battles through its most difficult days of the coronavirus pandemic so far.

Infections have surged since early March and on April 1 hit their highest daily level since the pandemic began. In the past fortnight, Poland has recorded 989 cases per 100,000 inhabitants, the third highest figure in the EU. Deaths have surged to record levels and the number of people in hospitals and on ventilators with Covid-19 have also touched all-time highs.

“The scale is incomparable [with the first wave],” said Drozdz. “Back then there were a few confirmed cases per district. Now it’s a few confirmed cases per block of flats.”

As elsewhere in Europe, the surge has been caused by the arrival of the more infectious B.1.1.7 strain of the virus first sequenced in the UK, which in recent weeks has accounted for 90 per cent of new cases in Poland.

A nurse attends to patients at an emergency ward in Bochnia, Poland. The country has the lowest number of practising physicians per capita in the EU © Omar Marques/Getty Images

But critics say the government also made errors that let the strain spread more quickly: first, by not enforcing rigorous enough checks on the thousands of Poles who returned from the UK for Christmas; and second, by loosening restrictions in mid-February once the British variant was already circulating.

The huge inflow of patients has left the health system reeling. Although about a quarter of Covid-19 beds and 20 per cent of ventilators are still free, they are not always in the same place as the people who need them.

Some 150 patients had to be moved from the southern Silesia region to other areas this month after local hospitals were overwhelmed. In the Mazovia region, officials were so worried about oxygen supplies before Easter that doctors were asked to limit the use.

The biggest problem, however, is a lack of staff, the result of years of high emigration and chronic health system underfunding. A Eurostat study in 2018 found that Poland had the lowest number of practising physicians per capita in the EU, with just 238 per 100,000 inhabitants.

“It’s not just Covid that’s the problem. It has just highlighted how insufficient our health system is,” said one young doctor recently sent to work with Covid patients in a Warsaw hospital.

In an effort to regain control of the situation, the government imposed new restrictions in mid-March, which it extended last week to April 18. It has also used powers allowing it to oblige medical professionals to switch from their normal jobs to treating coronavirus patients, and repeatedly expanded the number of Covid beds and ventilators in Poland’s hospitals.

Medical staff at the intensive care unit of Krakow University Hospital. The government has used powers obliging health professionals to switch from their normal jobs to treating coronavirus patients © Omar Marques/Getty Images

Adam Niedzielski, health minister, said on Friday there were signs that the surge in infections was beginning to ebb and that a peak in hospitalisations was imminent. He added that Poland would now also speed up its vaccination drive by broadening the groups of people allowed to give jabs.

“[Accelerating vaccinations] is the only possible answer, given the available resources, to fight the pandemic and get out of the third wave,” he said. “It is a very difficult time and therefore special solutions are needed.”

Yet doctors in hospitals in hard-hit areas are still scrambling to cope, with small teams juggling large numbers of seriously ill patients. The Warsaw doctor said a particular challenge for new staff was helping patients who needed intubation because their oxygen levels were dropping — a procedure normally carried out by specialists.

“You just have to wait for the call from the anaesthetist,” she said. “You don’t get emotional because that’s what we do on a daily basis — but you feel a bit insufficient as a doctor . . . You feel helpless.”

The shortages have left medical staff with huge workloads. “[My colleagues] are exhausted. You don’t have to ask, you can see it when they come off their shifts. I’ve just done my first few shifts and that was the hardest day and a half in my life,” said a second doctor recently deployed to a hospital for Covid patients in Warsaw. “Those who have been working here since February look as if they were seriously ill already.”

To boost their energy, some medics have resorted to giving themselves oxygen and intravenous drips, according to Polish media. Asked about the accounts by Radio RMF24, Niedzielski acknowledged that staff shortages were “noticeable” and described Poland’s medics as “heroes”. “This really is a war and the situation requires non-standard behaviour,” he said.

On top of the exhaustion, medics also have to deal with the psychological pressure that comes with confronting death so frequently. Treating couples where one partner was far sicker than the other, or parents who would not survive, was particularly tough, the second doctor said.

“Sometimes it is easier not . . . to build up links with patients because then when they die I feel like I have lost someone close myself, someone whom I fed and gave stuff to drink, whose hand I held,” she said.

“But on the other hand . . . I cannot imagine cutting off all these emotions completely. You have to find the golden mean. But it’s not easy.”



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Analysis

Signs of inflation emerge as Chinese producer prices leap

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For investors and governments eager to spot any sign of inflation as the global economy recovers from the coronavirus pandemic, Chinese factories are a good place to look.

The country this week released figures showing that the price of raw materials and goods leaving its factories rose 6.8 per cent year on year in April, its fastest pace of growth in more than three years.

For almost all of 2020, China’s producer price index was in negative territory as Covid-19 suppressed demand. The recent and sudden rise was partly driven by the comparison with a year earlier and, with consumer price rises still below 1 per cent, the overall inflation picture remained mixed.

But the data was nonetheless a sign of pockets of price increases emerging across China’s rapid recovery, where higher overall inflation is expected this year. It also reflected a global rally in commodity prices that has been supported by China’s voracious demand as well as hopes that other big economies will bounce back, too.

“A combination of China and external factors led to this PPI surge,” said Robin Xing, chief China economist at Morgan Stanley. “It’s like a perfect storm.”

Line chart of Producer Price index showing Producer prices in China rise at the fastest year-on-year pace since 2017

China’s PPI index is made up of prices of producer goods, such as wardrobes or washing machines, that factories sell to shops before they are sold on to consumers.

It also includes the prices of raw materials and commodities, such as coal, when they are sold from extraction companies to businesses that use them to make goods.

It was the latter that drove the recent surge in Chinese producer prices. Global commodity prices, which collapsed last year in the early stages of the pandemic, have since rebounded. Iron ore this week hit its highest level on record, while oil prices have recovered sharply from last year.

Xing estimated that 70 per cent of the April PPI increase was driven by commodities. That rally was also tied to China’s recovery, which has been backed by strong industrial growth and a construction boom that led to record output of steel last year.

As such, the data reflected both the pace of China’s recovery as well as a global commodity rally that it helped fuel and now extends beyond it.

For policymakers, one crucial question is whether higher producer prices will feed through to consumer prices. China’s consumer price index was just 0.9 per cent in April — its highest level in seven months, but far from a level that would generate immediate fears of broader inflation within China.

While economists expect a rise in CPI inflation in China this year, they suggested that any reaction from the People’s Bank of China to this week’s data was unlikely. The portion of the producer price index that represents the prices at which businesses buy consumer goods, as opposed to raw materials, was up only 0.3 per cent year on year.

Analysts at HSBC said transmission from PPI to CPI would be “limited”, allowing policymakers to remain “accommodative”.

Ting Lu, chief China economist at Nomura, forecast CPI inflation to rise to 2.8 per cent by the end of the year, with “pass-through” effects from PPI. But he suggested that the PBoC was unlikely to tighten in response to PPI, and that higher raw material prices instead posed a risk to Chinese demand and the wider recovery given controls on credit availability.

“For a typical borrower, $1bn six months ago may be enough to buy steel and cement to finish one project, but today it’s [maybe] not,” he said.

While the PBoC has not increased official rates since lowering them last year, the Chinese government has nonetheless tightened credit conditions over recent months.

It has also taken measures to rein in both its property sector, on concerns that easier money would encourage asset bubbles, and its steel sector, which has churned out the metal at a rate that threatens Beijing’s environmental commitments.

China’s gradual decarbonisation ambitions — and any production cuts they lead to within the country — are seen as constraints on supply, buoying the price of commodities further. 

Beyond raw materials, economists are closely watching other shortages. Iris Pang, chief economist for greater China at ING, said producer price inflation would be followed by chip inflation. A shortage of semiconductors, she said, was already beginning to drive price increases for consumer products such as washing machines and laptops.

Line chart of Per cent  showing Producer prices for consumer durables are gathering momentum this year

While the PPI index showed a much weaker increase in consumer goods than for raw materials, on a month-on-month basis there were notable rises. Durable consumer goods were up 0.4 per cent month on month in April, the fastest pace of growth since at least 2011, according to CEIC, a data company.

Apart from domestic construction, part of the demand for raw materials has been to drive the production of goods for export to western countries.

Data on Friday showed Chinese exports leapt 32.3 per cent year on year in April. But even when compared with April 2019, before the pandemic, the rise was about 16 per cent on an annualised basis, Morgan Stanley estimated.

Competition between producers in China meant this did not necessarily imply inflation for consumers overseas. Instead, China’s recent PPI jump hinted at just one of the global effects of western responses to the pandemic.

“If you try to figure out what is the end demand here for this PPI recovery, it is global stimulus,” said Xing. “External demand led to China’s export recovery, [and] now it’s far beyond its potential growth”.



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Analysis

Covid batters India’s aspiring middle classes

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When Ram Prakash died after a feverish and breathless week, his wife and 16-year-old daughter’s heartbreak was compounded by fear that the modest middle-class safety net he had knitted together might be ripped apart.

The 53-year-old, a tax adviser to local businesses, was one of the millions who had joined India’s fast-growing middle class in recent decades. Their rising incomes, better education and consumption powered one of the great global economic success stories.

But the calamitous second wave that claimed the life of Ram, the family’s breadwinner, has shattered the Prakashes’ hopes for the future. “Our life was going good but now it’s all over,” said Uma, his widow.

Economists warned that the latest outbreak could have long-term ramifications for middle-class Indians, whose rising consumption was expected to be the country’s growth engine for many years.

“India, at the end of the day, is a consumption story,” said Tanvee Gupta Jain, UBS chief India economist. “If you never recovered from the 2020 wave and then you go into the 2021 wave, then it’s a concern.”

India reported more than 320,000 Covid-19 infections and 3,800 deaths on Monday. Experts maintain that both figures are vastly undercounted.

The disease has heaped suffering on Indians irrespective of background. Yet this time, it has also hit hard an aspirational middle class whose newfound privilege previously helped shield them.

A lack of oxygen has been blamed for thousands of deaths © Sanjeev Verma/Hindustan Times via Getty

Public-health experts pointed to signs that after widespread infection among the urban poor last year, sectors of society including the comparatively affluent were more vulnerable this time round. This was compounded by the near-collapse of private health services on which they relied.

“You’re affluent but you can’t get a hospital bed. You’re affluent but you can’t get oxygen,” said Saurabh Mukherjea, founder of Marcellus Investment Managers. “That’s deeply disorientating.”

India’s middle class was already severely weakened by the recession that followed last year’s lockdown, even if they were better protected from the virus.

The Pew Research Center found that 32m people fell out of India’s middle class — defined as those earning between $10 and $20 a day — in 2020. That represented more than half of those added to the category since 2011.

Bar chart of Estimated change in number of people in each income tier due to the global recession (m) showing India’s poor grew while middle class shrank in 2020

India’s economy was expected to roar back before the second wave struck. For middle-class Indians on the brink, such as the Prakash family, this second shock may prove too much.

Ram, the tax consultant, had moved his family to a one-bedroom house in a humble New Delhi neighbourhood, bought a car and sent his daughter to a low-cost private school, hoping she could become a chartered accountant.

“He gave us so much when he was alive,” said Vasundhara, his daughter. “I only hope I will be able to continue my studies.”

Experts have debated what drove the high caseloads among middle class and rich Indians during the second wave.

Anup Malani, a professor at the University of Chicago, suggested that those populations proved more susceptible, especially as new variants spread.

In Mumbai, for example, studies last year found that about 50 per cent of slum residents had Covid-19 antibodies, compared with less than 20 per cent in more affluent surrounding neighbourhoods.

This is believed to have left the middle and upper classes more vulnerable, particularly to severe disease, researchers said. Doctors have reported similar trends elsewhere in India.

“The first wave largely infected poorer populations,” Malani and two co-authors wrote this month. The second wave “is disproportionately composed of individuals who are from non-slums”.

Bar chart of Estimated number of people in each income tier in 2020 before and after the global recession (m) showing The pandemic sets back growth of India’s middle class

Researchers said more data were needed but other susceptible populations could include those outside cities, such as in poor rural areas with shoddy healthcare where the virus was wreaking havoc.

The outbreak was so sudden that it overwhelmed even India’s best hospitals, including private facilities in cities such as Delhi or Bangalore.

Fewer than 1 per cent of Delhi’s 5,800 Covid-19 ICU beds are available, while crippling shortages of oxygen have contributed to countless deaths.

After Ram Prakash’s oxygen levels dropped, his family spent two frantic days ferrying him to six separate hospitals — both private and public — in a desperate bid to find treatment.

In the end, they brought him home. Ram died on April 27.

Uma and Vasundhara fear economic ruin. They have a shortfall of Rs30,000 ($408) to meet immediate expenses, including school fees and the mortgage on a neighbouring unit that Ram bought as an office.

“Right now our worry is just to survive, to get food and meet our daily expenses. But there won’t be enough,” said Vasundhara.

They plan to sell their car and Uma, a former Sanskrit teacher, wants to find work again. But they worry hopes of a better life are over.

“We had never imagined this could happen to us,” Vasundhara said. “We just can’t get our head around this.”



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Reeves promotion underlines Labour shift to centre ground under Starmer

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When Sir Keir Starmer promoted Rachel Reeves to shadow chancellor late on Sunday night it emphasised his determination to defy the left of the Labour party and move in a more “centrist” direction after a series of disappointing local election results.

Reeves is unpopular with many “Corbynista” members — supporters of the party’s former hard left leader Jeremy Corbyn — because of comments she made in 2013 when she was shadow work and pensions secretary. That controversial moment saw her promise to be “tougher” than the ruling Tories on benefit costs.

Her role as vice-chair of Labour Friends of Israel is also contentious among many Corbyn supporters who oppose the actions of the Israeli government. And while other MPs agreed to serve on the Labour front bench under the Corbyn leadership in 2015, Reeves was one of a handful who refused to do so.

Starmer first considered making Reeves shadow chancellor when he became leader in April last year — only to drop the idea, fearing that it would prompt a backlash from left-wingers.

Yet it would be wrong to characterise the 42-year-old MP for Leeds West — a former junior chess champion — as a “Blairite” or “rightwinger” even in Labour terms.

Sir Keir Starmer promoted Rachel Reeves in a reshuffle of his front bench on Sunday © Stefan Rosseau/PA

During the last parliament she chaired the business select committee, a position she used to interrogate corporate failure by Carillion, the collapsed contractor. She meanwhile struck out as a writer, penning two books about female MPs.

In 2018, she used a speech in London’s East End to call for a new series of wealth taxes to raise more than £20bn a year — shifting the fiscal system from income to property. The then shadow chancellor John McDonnell resisted the idea, amid concerns over a backlash from middle class Labour voters.

Indeed, there was a moment in 2019 when some of Corbyn’s aides — including policy adviser Andrew Fisher — advocated bringing Reeves into the shadow cabinet.

Sharper edge but no shift in strategy

In the short-term her promotion to one of the most important roles in the shadow cabinet may give a sharper edge to Labour’s top team but not necessarily bring a shift in strategy.

That is because the party creates its election manifestos through a drawn-out process called the “national policy forum” over several years.

Starmer has eschewed creating new policies on the hoof in favour of a focus on rebranding, telling voters Labour is “under new management” after the electorally disastrous Corbyn, who lost two general elections in 2017 and 2019 — the latter by the biggest margin in nearly a century.

The opposition leader’s popularity rose last year as he forensically attacked the ruling Conservative government over pandemic failures. But with the Tories enjoying a bounce from the vaccine rollout, he was criticised during the local elections for a lack of a positive policy vision. Some Labour insiders blame that for the setback at the polls — in which the party lost 326 council seats and was defeated in the Hartlepool by-election.

On Monday, many colleagues were positive about the promotion of Reeves after a year in which she has been one of the most high-profile figures on the front bench.

As shadow Cabinet Office minister, she took the fight to the Conservative government over its spending on personal protective equipment — expressing anger at the many contracts given to Tory contacts. She has also kept up the pressure on the Conservatives over the Greensill scandal.

Colleagues said as shadow chancellor she will emphasise the need for Labour to show it can be trusted to run the economy — an area of traditional political weakness for the party.

‘Competent and sensible on the economy’

That would continue the theme set by Dodds, who said in a speech in January — using the word “responsible” 23 times — that Labour would offer “responsible economic, fiscal and monetary policy”. The Starmer team has already distanced itself entirely from Corbyn’s 2019 election manifesto, with £83bn of annual public spending increases.

In an interview with the Financial Times last year Reeves struck a similar tone, saying the party needed to be “competent and sensible” on economic matters.

Yet she is not expected to return the party to the “austerity lite” approach of Ed Balls, shadow chancellor under former leader Ed Miliband, who promised not to increase borrowing even for capital expenditure.

One ally said Reeves could be expected to draw up a “transformative” programme — involving changes to the tax system and the decarbonisation of the economy — while also reassuring the public that Labour would spend people’s taxes wisely.

The decision to shift Angela Rayner, deputy leader, from her job as party chair plunged the reshuffle into chaos at the weekend © Jacob King/PA

Starmer’s reshuffle at the weekend was thrown into chaos after allies of Angela Rayner, the deputy leader, leaked she was being demoted from her job as party chair after the local election failures. The ensuing political storm overshadowed some more positive electoral results on Saturday in cities such as Manchester, London and Bristol.

Rayner turned down the job of shadow health secretary and instead took Reeves’s old job as shadow Cabinet Office minister as well as “shadow secretary of state for the future of work”.

Deep discontent

On Monday, after a two-hour shadow cabinet meeting, Starmer was seen buying a coffee at Westminster with Rayner in an attempt to put on a public show of unity after a weekend of acrimony.

Starmer’s bungled reshuffle has sown deep discontent among senior Labour MPs. “You can’t understand how angry people are,” said one. Allies of Rayner said she felt a “deep sense of betrayal”.

The reshuffle saw Dodds move to party chair and Alan Campbell promoted to chief whip with the departure of 70-year-old Nick Brown.

Lisa Nandy, shadow foreign secretary and MP for Wigan, told colleagues she was convinced Starmer was planning to sack her and it was only a rearguard action by her supporters that persuaded him to drop the plan.

Nandy warned Starmer that she would quit the Labour front bench, rather than be demoted to another role.

Referring to the plans to demote first Rayner and then Nandy, one Labour MP said: “What genius would think it a good idea to demote not one but two women representing northern seats?”

 



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