Written by Mr. Kunal Sawhney, CEO, Kalkine Media

The sharp jump in the number of infections associated with the Omicron variant has materially increased the apprehensiveness of market participants as the government of the United Kingdom is expected to reintroduce some pandemic measures to contain the spread of virus in a matter of few weeks.

Given the high rate of infection across the widespread geography of the UK, the healthcare authorities have turned cautious as a large number of double-jabbed individuals are returning positive with the Omicron variant. On Sunday itself, the UK registered a 65% rise in the cases linked to the new variant with the total count of infections mounting over 3,000. As of 12 December 2021, the total number of Omicron infections stood at 3,137 following a rise of 1,239 confirmed cases on Sunday. Of the total, 2,953 cases have been confirmed in England with a single-day increase of 1,196 cases.

According to the latest estimates by the UK Health Security Agency (UKHSA), the Omicron variant has been spreading at a rapid pace across England with the country reporting a sharp surge in confirmed cases. As far as the transmissibility of variants is concerned, the new variant has been spreading more effectively as compared to the previously existing Delta variant.

Markets have experienced a lacklustre trade in the fourth consecutive session on Monday, 13 December as investors continue to contemplate the extent of damage due to the emergence of cases. According to the UKHSA, the Omicron variant will become the dominant variant in the upcoming days, accounting for over 50% of the total Covid infections in the country by the middle of December if it continues to multiply at the current rate.

High rate of infection is highly likely to increase the burden on the National Health Service (NHS) as the rate of hospital admissions will also soar as a proportion of patients remain vulnerable to such virus-induced infections.

Shockingly, the UK is set to surpass one million infections linked to the Omicron variant by the end of present month, if the prevailing rate of infection continues without any major correction.

Such a resurgence of cases in a country that started the Covid-19 vaccination drive, at a time when most of the businesses are looking forward to recognising a substantial increase in the earnings can severely disrupt the path of economic recovery as the services sector, mainly the enterprises operating within the hospitality industry are yet to see a meaningful rise in the revenues.

The government of the UK has already tightened the restrictions at various settings that are likely to host large gatherings. A large section of people who have made bookings around the Christmas season and the subsequent year-ender holidays have already cancelled the upcoming arrangements, reigniting the jittery amidst the businessowners. A number of enterprises have downsized their expectations from the festive season as anticipated earlier.

Most of the commercial settings were expecting to witness a sharp bounce back during the festivities, a period that can accelerate them on the so-called path of recovery. The adversities associated with the Omicron variant have once again renewed the tensions as European nations were already struggling with the Delta variant.

Any potential disruption in the business operations is likely to erase the cumulative recovery realised so far in the present calendar year. As far as the markets are concerned, the domestic benchmark index FTSE 100 was adequately poised to register fresh multi-month highs until the third week of November. The situation has categorically upended with the focus shifting on the upcoming developments with regard to the spread of Omicron variant, the fatalities linked to it and the rate of hospitalisation.