US election uncertainty and lockdowns

It appears the Democrats will fail to get a ‘clean sweep’ of the Presidency, the House and the Senate. If President Biden emerge, his agenda is bound to be limited.

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  1. Charles Stanley

Markets have taken the US political confusion well, so far. It now seems likely that the Democrats will not win control of the Senate as well as the House. So, even if they do in the end win the Presidency, the administration's scope for legislating the full agenda will be limited.

If Joe Biden does eventually succeed, it would usher in a new era for the US and advanced-country policy in most areas. This most intensely-fought election offered very different visions of the future. If Mr Trump holds on to office, we can expect more of the same. There will be efforts to agree a fiscal package to boost the recovery further whoever wins.

Mr Biden wants to strengthen the US response to Covid-19 in an effort to use the power of government to bear down more heavily on the spread of the disease. According to official figures,­­­ the US has now seen 9.38 million cases of the infection and suffered 231,000 deaths so far. The new President would find individual state resistance to introducing a European style national lockdown, but he could send messages and incentives to the states of the union to redouble their efforts to control the disease by proposing more rules of social control and limitations on business and social contacts.

He will doubtless take early action to make clear his wish to be in the mainstream again of world bodies such as the United Nations, World Health Organisation and World Trade Organisation. He would join the Paris Climate Change Treaty. He would also wish to reassure allies of a different approach to his predecessor.

The EU’s Health Union

Meanwhile, on this side of the Atlantic, the European Union and its member states are preoccupied with their response to Covid-19, which also dominates the UK debate. The Commission issued an important document with the not particularly catchy title of "Additional CV 19 response measures". The document claims that the EU has "led the global response" to the pandemic and uses polling to say to member states they need to co-operate and do more with and through the EU. The document is critical, admitting to a "number of shortcomings in the EU's health crisis response structures and actions." It tells us the EU Commission will launch proposals for an EU Health Union on 11 November 11. 

The EU is most concerned about the way in which open borders and freedom of movement were damaged by member states taking independent action to partially close their national borders in the early phases of the pandemic. The states are warned that any travel restrictions within the single market area must "be proportionate and must not discriminate between citizens of different member states". They are promoting more green lanes to ensure swift passage of trucks across national borders within the single market and approved EU tests for Covid-19 to allow people to continue to fly between member states. 

The EU has developed some common procurement of supplies during the crisis, but on a relatively -mall scale compared to total member state demand. They have sought data on cases, deaths, hospital capacity and other relevant matters through a common EU website and data portal, but only five member states are said to be currently sharing data in the way proposed. They wish to help transfer Covid-19 patients between member states where one becomes overburdened, seek common approved testing systems, and a European system of approved apps. So far, only three countries have linked up their national app systems, whilst 19 countries have produced their own systems. The EU believes 50 million EU citizens have downloaded national apps. 

EU to try and up influence

The EU has a vision of taking a much more prominent role in this pandemic and in a longer-term health policy. It stresses that "co-operation is essential to using the potential of new technologies, to ensure that scarce resources are deployed to best effect, and to ensuring that citizens and businesses can continue to benefit from the economic and societal benefits of the single market". The truth is the main EU member states have been building an anti -pandemic policy on World Health Organisation lines and sharing their data globally. Most are relying on the rolling lockdown model, and most are now struggling again with a second surge of the disease. Belgium remains the country most affected in terms of case numbers and deaths, but France, Spain and the UK, still a member of the single market, are also badly affected. 

The Health Union will have implications for future procurement of supplies, development of new medicines and the evolution of health policies. It will strengthen the roles of the European Medicines Agency and the European Centre for Disease Control. Today's markets are going to be more swayed by the length and severity of lockdowns on both sides of the Atlantic, and by progress with developing the treatments and vaccines that can tame the virus.

The current round of lockdowns is damaging to all sectors and businesses depending on social contact – and is especially worrying for the many businesses that rely heavily on pre-Christmas trade. It will doubtless boost all the online offerings for the Christmas season instead. There are stories of the possible early roll-out of vaccines, and a broadening range of pharmaceuticals and vitamins that may help reduce the intensity of the disease. These all matter as they will determine when and where there is some return to more normal social contacts and business activity.

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