The City has weathered financial contagions before, but this time the contagion is biological. European health authorities have confirmed that cases of gonorrhoea and syphilis have surged to all-time highs, fuelled by a post-pandemic 'resurgence of risky sexual behaviour' and, crucially, what experts are calling 'antibiotic resistance'. For the markets, this is a stark reminder that even the most profitable of economies can be undermined by a public health crisis.
The gilt yield curve has barely flinched, but the cost to the NHS is about to spike. When the tab for treating these infections rises, so too does the pressure on the Chancellor's fiscal arithmetic. The real concern, however, is the shadow of antimicrobial resistance.
This is a silent liability on the balance sheet of the healthcare system, a ticking time bomb for future expenditure. Investors should watch the pharmaceutical sector: any breakthrough in novel antibiotics will be a bullish signal. Until then, the spread of these infections is a drag on productivity and a drain on public finances.
The UK health authorities' urgent warning is a reminder that some risks cannot be hedged, and some debts cannot be restructured. The bottom line? This is a market inefficiency of the most basic kind, and it demands a response from both policymakers and the private sector.
The clock is ticking on this bacterial bond, and the yield is increasingly negative.
