Yahoo Finance Pingdemic chaos dealing £5bn blow to economy
The "pingdemic" is crippling Britain's recovery as the economy suffers a near-£5 billion blow from millions of self-isolating staff who cannot work from home, analysts have warned.
Private sector firms last month suffered their slowest growth since the start of unlocking in April as a surge in self-isolating staff worsened recruitment difficulties and labour shortages, monthly Purchasing Managers' Index data show.
More than 600,000 people have been pinged by the NHS Trace and Trace app and been told to self-isolate for up to 10 days in the past week, disrupting businesses and hitting orders.
The Centre for Economics and Business Research (CEBR) said the cost of the pings could reach £4.6 billion between "Freedom Day" on July 19 and August 16, when double-jabbed people will be able to return to work after a negative PCR test.
Despite Number 10's insistence that the NHS app is "doing its job", food industry workers have now been included in a "test and release" scheme to prevent critical infrastructure from failing.
However, other workers who have been in contact with someone who has Covid must continue to self-isolate for 10 days even if they get a negative test.
The IHS Markit/CIPS flash composite PMI composite index of economic activity fell to 57.7 in July from 62.2 in June, the weakest since the economy was in lockdown in March. Anything above 50 on the index indicates growth in the economy, however.
Business confidence is also at its lowest ebb for nine months and cost pressures rose at the fastest pace in the 23-year history of the IHS Markit survey as shortages of staff and materials triggered a jump in inflation. A resurgence of growth in August looks unlikely.
Duncan Brock, a director at the Chartered Institute of Purchasing and Supply, said: "Shortages of labour availability were made worse as many staff self-isolated, took other job opportunities or caught up on annual leave entitlements."
A short report from the CEBR warned that an aggregate 7.6 million people – about a quarter of the entire workforce – could be pinged over the next four weeks, of whom 3.6 million would be unable to work from home.
The Government has named 16 sectors in which fully vaccinated workers will be exempt from the normal 10-day quarantine after coming into contact with someone with the virus, if their absence would do major harm to the service.
The sectors include emergency services, border control, medicines and food supply, allowing about 10,000 key workers to avoid having to self-isolate. However, the CEBR warned that this will cut just £300 million off the estimated £4.6 billion cost to the economy of the disruption.
That cost equates to 0.9 per cent of UK GDP in the first quarter of this year, or 0.2 per cent of total GDP in 2020 – about one third of the entire UK aid budget. The daily cost of the lost output is estimated at £102.2 million for pings received on "Freedom Day" alone, rising to a peak of £227.6 million on August 5, the CEBR said.
Karl Thompson, a CEBR economist who drew up the figures, told The Telegraph: "We've assumed that Freedom Day will cause the pace of infection to continue at the rate seen in recent weeks. Taking this into account, our calculated GDP impact is nearly £5 billion over the next month, equivalent to a loss of about 2.5 per cent of monthly GDP."
Separately, ports bosses attacked the Government's "burdensome and unnecessarily bureaucratic" system for trying to keep critical industries running by allowing workers out of quarantine, saying it showed a "staggering misunderstanding" of critical supply chains.
Tim Morris, the chief executive of the UK Major Ports Group, said the procedures presented bosses with a "significant bureaucratic challenge" and might be too slow to respond to the challenge.
Mr Morris said: "We are not comfortable that such a burdensome, bureaucratic system can work quickly enough. That there is what seems a blanket exemption on retail food supply and not for ports seems there is one rule for some, and another for the rest.
"It's deeply frustrating that you can work in an M&S food warehouse but not in a port. It shows a staggering misunderstanding of the critical parts of Britain's supply chain."
Stephen Phipson, the chief executive of manufacturers' organisation Make UK, said the new rules were a step in the right direction but the process was "cumbersome and time-consuming".
Sam Handley, the co-director of Nottinghamshire-based Swiftool Precision Engineering, said about 15 per cent of her 140 staff were either isolating or awaiting results from Covid tests that are keeping them away from work.
"It doesn't make sense. A year ago when the pandemic was at its worst, we were told to keep working because we are in manufacturing," she said.
Tracey Dawson, the managing director of electronics manufacturer Dalatech, said: "Our younger members of staff seem to be pinged daily. This disruption is causing us major production scheduling problems and the majority of production is now running late."
The Cabinet Office was contacted for comment.
