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  • ECB president Christine Lagarde warned governments not to tighten coronavirus stimulus programmes too soon

  • US retail giant Target pulled further away from its struggling rivals with a doubling of online sales during the holiday shopping period

  • UK department store Debenhams named more stores — including its flagship Oxford Street location — that would not reopen once pandemic restrictions are lifted

China restricts travel ahead of lunar new year holiday

After a surge in coronavirus cases, China today introduced its strictest lockdown measures since the beginning of the pandemic one year ago. Travel restrictions now affect 23m people ahead of next month’s lunar new year holiday — usually the world’s largest annual mass migration — when city workers return to their family homes across the country. 

China is not alone in tightening curbs in the face of a resurgent virus. The Netherlands today extended lockdown measures by three weeks while Italy said it would do likewise until the end of April and Germany will consider a 10-week extension to its restrictions. Japan widened its state of emergency beyond Tokyo and closed its border to non-Japanese nationals. Scotland, meanwhile, restricted one of the few opportunities left for some businesses to keep going: the ability for customers to “click and collect”.

Lockdowns will succeed only if trust in authorities remains high and, unfortunately, according to a new survey, this is in decline — with worrying implications for the rollout of vaccines.

In 20 of the 28 countries surveyed by Edelman, including the US, Germany and the UK, under 70 per cent of respondents said they planned to get the Covid-19 vaccine within a year of it becoming available.

And it’s not just governments that are facing growing scepticism: people are also losing confidence in businesses and news sources, whether traditional outlets or social media.

Governments have lost their initial pandemic confidence surge

The intensified lockdowns have also sapped the confidence of investors. Global equities markets, recently lifted to new heights by vaccine developments and the prospect of new US stimulus, lost their fizz in the face of what one fund manager called “the pandemic that does not have any end in sight”.

Bookmark this: Follow the changing picture of global lockdowns with our interactive tracker.

Markets

Bitcoin is experiencing some turbulence of its own after profiting from pandemic-induced uncertainty last year. Hopes are diminishing that big pension funds and traditional investors will pile into the cryptocurrency anytime soon, while analysts at Bank of America asked in a note to clients last week whether bitcoin was the “mother of all bubbles”.

Vanguard, the world’s second-biggest asset manager after BlackRock, confirmed its position as a firm winner from last year’s market volatility, as it revealed its assets had hit a record $7tn. The two companies dominate the industry, thanks to the shift in recent years by investors into index-tracking exchange traded funds.

Billionaire investor Louis Bacon is another winner from last year’s chaos. Moore Capital, the fund manager’s firm, gained more than 70 per cent last year, fuelled by buying US government bonds before the pandemic sent them to record highs.

Business

Evidence continues to mount of the impact of lockdowns on the retail sector. The surge in online shopping was not enough to compensate most UK retailers for the effect of renewed restrictions on stores during the crucial Christmas shopping period, although ecommerce-focused companies such as Asos and The Hut Group performed well. The knock-on effects include property owners, such as Landsec, collecting less rent from retailers.

Football clubs across Europe have been hit by the loss of ticket, merchandise and sponsorship income during the pandemic. In France, reports Paris correspondent Leila Abboud, the top division has been stuck in a “slow-motion” crisis since October after a debacle over TV rights.

The global biking boom during the pandemic has inspired UK manufacturer Brompton to announce rapid expansion plans. The company started selling directly to consumers during lockdown, creating an ecommerce business that normally would have taken two years, said Will Butler-Adams, managing director and major shareholder.

Global economy

Industrial production in the eurozone increased for the seventh month in a row, thanks to an uptick in activity in Germany and strong figures from Ireland — possibly related to stockpiling ahead of its UK neighbour’s exit from the EU.

UK chancellor Rishi Sunak is strongly resisting pressure to tighten lockdowns in sectors such as housing, construction and manufacturing. A shutdown of the housing market — enjoying a mini-boom because of a temporary stamp duty holiday — could cause many deals to collapse. Vehicle maker Honda has been hit by global chip supply problems caused by the pandemic, forcing it to temporarily close its Swindon plant.

Mexico, unlike much of Latin America, has not ramped up spending on pandemic stimulus, thanks to its populist government’s conservative attitude towards debt. The approach has been criticised by the IMF and World Bank, which have encouraged countries to take advantage of low interest rates and borrow more.

Bar chart of Fiscal stimulus as % of GDP showing Mexico spends least among major Latin American economies on pandemic stimulus efforts

Essentials

Mental health at work: The pressure to collaborate can sometimes increase the intensity of work and tools such as agile working and task management apps can be counter-productive. Read our series on how employers can help fight burnout and support flexible work during the pandemic.

Have your say

Execuman1 comments on: Here’s how the Fed can do more to support US small business:

As a small-business owner, and an investor . . . the Covid experience for us was daunting but we learned a few lessons. We furloughed employees. We learned we just needed fewer people. We shut down sales offices and showrooms at the direction of the states they were in. We learned that we do not need so much real estate. We survived digitally. And our clients performed from remote locations. America faces a new landscape in which vast amounts of real estate are now rendered obsolete, and a perhaps permanently reduced work force where many jobs will just not be replaced. We learned to work with less and manage with less. We had to do so. Further, we learned that working in central cities is not essential, and it is preferable to telecommute. In fact, it is safer. Are the trillions in real estate a misuse of capital in the modern world? That is the real question for central banks around the world

Please share your views with us — email us at covid@ft.com. Thanks

Final thought

Many people have turned to yoga as an escape from the turmoil of the past 12 months, but can meditative practices really affect your mental health? South Asia bureau chief Amy Kazmin submits herself to the scientists to find out.

© Subhash Sharma

We would really like to hear from you. Please send your reactions or suggestions to covid@ft.com. Thanks

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