Omicron is a reminder of our economic vulnerability over Covid-19

Since the omicron variant of Covid-19 was reported we have seen swings in financial markets, forecasts of economic turbulence and a return of political rows over restricting people’s behaviour to help curb its spread.

The emergence of the new variant is a reminder that employers, workers and households — as well as politicians — crave certainty. But if there is one lesson from the last 18 months it is that the coronavirus has taken us into a tunnel of uncertainty. Wednesday’s imposition of “Plan B” restrictions in the UK was another reminder of the ongoing volatility.

This has two implications that will become important over the coming weeks. The first is it is taking us a lot longer to understand the health, let alone the economic, implications of each new phase of the coronavirus. Everyone is understandably reaching out for facts they can rely on to justify their confidence that there is a light at the end of that tunnel — and specifically one that will allow Christmas as normal as possible in the northern hemisphere.

Thus, there has been much pick-up of comments by Angelique Coetzee, the doctor who first observed the new variant and who also chairs the South African Medical Association, when she told the BBC that symptoms linked to omicron had been very mild. Vaccine developers such as AstraZeneca have been careful with the double negatives to say there is “no evidence so far” that existing vaccines will not go on providing protection against the variant.

Behavioural economists describe the tendency to grab onto the evidence that supports their existing beliefs as confirmation bias. For investors this means leaning on the claims that supports their position that, for example, financial markets will ride out the latest scare.

But they have also read that Soumya Swaminathan, the WHO’s chief scientist, has said it is “premature to draw any conclusions about the efficacy of vaccines against omicron”. The watchdog has been careful to say that it is “not yet clear” if omicron is more transmissible or causes more severe disease. Understanding the level of severity of the omicron variant will take potentially take “several weeks”.

The second is that there remains an immense inequality between the west and the global south in terms of both the access to vaccines and also the financial buffers to fund measures to help citizens and business affected by the virus and the restrictions aimed at curbing its spread.

Advanced economies have succeeded in developing and distributing vaccines to their citizens. Some two-thirds of eligible people in the European Union and UK have been fully vaccinated. The figure for South Africa is 25 per cent and for the developing world just 6 per cent.

Despite many promises at the outset of the pandemic by rich countries to share vaccines with the rest of the world, according to the charity ONE, just 55m out of the 8bn vaccines administered across the world have gone to low-income countries.

The decision of the United States, the UK, France and Germany and some 35 other mainly wealthy countries to close their borders to South Africa and its neighbours must have felt like shooting the messenger. McGill university epidemiology professor Madhu Pai took to Twitter to point out that the “big panic” had led to countries being punished for reporting a new variant that was not yet fully understood. “No panic over the 3 billion-plus people who’ve had little access to vaccines, tests and therapeutics.”

It is not only selfish not to share vaccines when many countries have a surplus, but it is very short-sighted. The mantra “none of us is safe until all are safe” has been observed only in the breach. An alliance of agencies including the WHO, Covax and the African Vaccine Acquisition Trust have had to appeal to donor countries to release donated doses in large volumes and in a predictable manner.

Omicron should be seen as a warning signal. It may turn out to be mild and vulnerable to vaccines, but it is unlikely to be the last variant. As one doctor tweeted, we should have no desire to learn the entire Greek alphabet.

As long as we remain on the long road towards mass immunisation, there are greater risks over the impact of new variants. And while that uncertainty hangs over us, financial markets, employers and households will be unable to make rational decisions.

The reason we can’t see the light at the end of the tunnel is because the tunnel is a lot longer than we hoped.