The discovery of France’s first confirmed Ebola case has sent a tremor through Whitehall, prompting the UK government to activate emergency screening protocols at Channel ports. For a nation already grappling with the fiscal hangover of pandemic-era spending, this is an unwelcome reminder that the global health threat has not been fully priced into the market. The patient, a French national recently returned from Guinea, is being treated in a Paris hospital.
But the virus does not respect borders, and the City is watching the gilt yield curve for signs of risk aversion. The Treasury, still nursing a deficit after COVID, will be acutely aware that a full-blown epidemic could send bond yields spiralling and capital fleeing to safe havens. The screening measures, which include thermal cameras and health questionnaires at Dover, Folkestone, and the Eurotunnel terminal, are a sensible insurance policy.
But one must question the efficiency of such interventions. The UK border is porous; the volume of traffic from France is enormous. The cost of these protocols, both in direct expenditure and potential economic disruption from delays, must be weighed against the probability of a case slipping through.
The Bank of England, meanwhile, will be monitoring the situation for volatility in sterling. A health scare that depresses business confidence or disrupts supply chains is the last thing the MPC needs as it tries to calibrate interest rates. The fundamentals of the UK economy remain fragile.
A new viral threat could easily trigger a flight to quality, with investors dumping pound-denominated assets. For now, the market reaction has been muted, but that could change rapidly if the French cluster grows. The government must ensure that its response is proportionate and does not become another fiscal burden.
The bottom line: vigilance is cheap, panic is expensive.
