Ross Clark

How big a deal is long Covid and can it be treated? Opinions range from it being a serious impediment to the health of millions of those who suffered from Covid-19 to a figment in the imagination of the workshy. A study by the University of Oxford of a drug developed by US Pharmaceutical company Axcella Therapeutics may just help to shed some light. The drug, AXA1125, is designed to boost the performance of mitochondria, which generate energy for our cells and control the amount of inflammation in the body. It is believed that long Covid causes fatigue – among other symptoms – by inhibiting the mitochondria.

Good news – at least for those who hold faith in economic forecasts. The IMF has just eradicated half the recession it forecast, in January, for Britain. At that point, it expected the UK economy to shrink by 0.6 per cent over 2023 – which would have meant Britain uniquely suffering a recession among advanced nations. Today, in its latest World Economic Outlook, the IMF has revised that down to a fall of 0.3 per cent. Moreover, while the outlook for Britain has improved, for a number of other countries it has worsened, most notable for Germany and Japan. Germany is now also forecast to share our recession, with output falling by 0.1 per cent over 2023.    But then who cares, when economic forecasts have proved so wide of the mark in the past?

Just when we thought inflationary forces were softening, the price of crude oil has shot up sharply today in response to an announcement by Opec that it will try to reduce production. A barrel of Brent crude, which touched $120 last summer before falling back to $75 last month, reached $85 at one point today. Some analysts expect it to hit $100. Given that the benign forecasts for inflation which shaped Jeremy Hunt’s budget were predicated on a falling oil price, has the case for economic recovery now collapsed? Unfortunately, in spite of the US’s drive towards energy independence in recent years, the world remains depressingly reliant on Opec for oil On the positive side, last year’s inflationary surge in Europe was more about gas than oil.

The end of the dollar as the world’s reserve currency has been predicted so many times that it is tempting to nod along with Jay Powell, Federal Reserve chairman, who pronounced last week that there is no immediate threat. But with high inflation in the US and China cuddling up with Russia, is it something the world should be taking seriously?      If the dollar was dumped then it would have serious consequences for the global economy. The status of the dollar allows the US to borrow much more cheaply than other countries, allowing it to sustain public debt of more than 100 per cent of GDP for the past decade. If that were to unwind, it would push up the cost of servicing US debt. Recent developments have made some analysts uneasy.

So, things really are different this time. The US Federal Reserve has decided to raise its Federal Funds Rate (its main interest rate) by a quarter-point, to 4.75 per cent – 5 per cent, in spite of a banking crisis that has seen two large banks fail in the past fortnight. For the past two decades, this sort of thing didn’t happen. Under the unwritten laws of the ‘Greenspan put’, the Fed could be relied upon to provide some form of stimulus at the first sign of financial trouble. It began with the collapse of the hedge fund Long Term Capital Management in 1998, when the Fed put together a $3.6 billion bailout funded by a consortium of banks, and it carried on long after former Fed chair Alan Greenspan himself had departed the scene.

Another Sunday, another banking takeover swiftly arranged before markets open on Monday morning. This time Credit Suisse has agreed to be bought by fellow Swiss bank UBS for 0.5 Swiss Francs a share – less than a third of its closing price on Friday and less than a tenth of what the bank was worth a year ago. A banking collapse which was beginning to look inevitable in spite of a 50 billion Swiss Franc bailout by the Swiss central bank on Friday has been averted, market turmoil has been avoided, or postponed, jobs have been saved (although many are expected to be lost in London as Credit Suisse’s investment banking operations are shrunk). Shareholders have not been left empty-handed. But at what cost?