A personal view from Ian Stewart, Deloitte’s chief economist in the UK.

Within days of the easing of the second UK lockdown, on 2 December, cases were rising rapidly, driven by a new, more transmissible variant of COVID-19. With existing measures unable to contain the virus England entered a third lockdown on 5 January.

Case rates have dropped by almost 40 per cent since their peak on 10 January, but hospital admissions have fallen only slightly and the number of deaths, and of patients on ventilators, have continued to rise.

The tight restrictions needed to curb the new variant are likely to generate a renewed contraction in activity in the UK and much of the EU in the current quarter, giving growth a W-shaped profile. In the UK heightened public concern about contacting the virus, the closure of schools and the resulting disruption to working parents mean that levels of mobility are lower today than in the second lockdown in November.

Some things are moving in the right direction. A stronger stay at home message appears to be working. Researchers at University College London found that compliance with the rules has returned to levels last seen in May 2020. New confirmed cases peaked in early January. The economy is better placed to maintain activity now than in the first lockdown. Last April GDP contracted by 23 per cent as the UK went into its first lockdown while the second lockdown in November generated a decline of under 3 per cent. Early estimates of activity in January from surveys of purchasing managers show that, even under the more stringent controls that came into effect at the beginning of this month, the UK saw a lesser contraction than last spring.

Most importantly the UK’s vaccination programme is proceeding at pace. The UK has vaccinated a greater proportion of its population than the US or any other country in Europe. (As of 20 January the UK had vaccinated more people than Germany, France, Italy and Spain combined.) YouGov reports that 80 per cent of UK adults plan to get vaccinated, a higher level than in any major industrialised country.

As of last Friday, almost 5.9m people in the UK had received their first dose, more than a third of the way to meeting the government’s target of offering a first vaccination to all of the 15m over-70s, frontline health and social care staff, care home residents and the clinically extremely vulnerable by 15 February.

Last week health secretary Matt Hancock said that the UK is on track to meet this target. A quick calculation confirms this judgement. With a tally of 5.9m first doses by the 22 January the UK would need to administer 381,000 new first doses a day in the 24 remaining days until the 15 February deadline. Given that daily vaccinations more than doubled between Monday and Friday last week, to 478,000, the mid-February target looks within reach. As the groups currently receiving vaccinations have accounted for 88 per cent of COVID-19 deaths so far, achieving the February target would be an important stage in the effort to contain the virus.

But even if the UK reaches this landmark it is unlikely to herald a significant easing of restrictions. While deaths have been heavily concentrated in the groups now receiving vaccinations, younger patients make up a high proportion of current hospital admissions. The median age of patients admitted to intensive care is 61 and a quarter are 52 or younger. With only the over-70s vaccinated, a major easing of restrictions in February could risk a surge in hospital admissions of those in their 50s and 60s.

If the NHS is able to continue vaccinating at a rate of just under 381,000 people a day it would be able to administer first doses to all 32m people in vaccination priority groups – the over-50s, those with underlying health conditions and the highest priority groups discussed above – by late March, shortly before Easter. With take up unlikely to be 100 per cent and the continued growth of the vaccination programme, it could come more quickly.

As these groups have accounted for 99 per cent of COVID deaths getting to the 32m target by late March could pave the way for a greater easing of restrictions in the second quarter of the year. A comprehensive lifting of restrictions will, we think, follow, when the whole of the adult population, of about 52m people, have received first vaccinations, perhaps around the middle of the year. Our central view is that the third quarter is likely to see a material easing of restrictions, a strong rebound in GDP growth and the beginning of the recovery in earnest.

The government’s vaccination plan sets out a less ambitious target of offering all adults a vaccine by the autumn, but the rapid pace of progress so far suggests an earlier date is possible.

There are significant risks to the rapid rollout of the vaccine, most obviously related to production, distribution and take up. Opting for a rapid provision of first vaccinations by pushing back the second dose to 12 weeks has raised questions about the efficacy of a single dose, particularly of the Pfizer jab.

Other risks relate to the possibility that immunity could fade and the emergence of vaccine-resistant strains. The South African and Brazilian variants are of particular concern. Laboratory testing has found that about half of those previously infected with COVID-19 appear not to have antibodies that would protect against the strain identified in South Africa. Areas of Brazil that were thought to have reached herd immunity are seeing new outbreaks.

More research is needed to establish whether the current vaccines will be effective against these strains or others that may emerge.

But by bringing a new vaccine to market in less than nine months, a fraction of the usual time, the pharmaceutical industry has demonstrated an ability to move at pace. Updated versions of vaccines to tackle new variants would probably be available even more rapidly. BioNTech has said that it could modify its vaccine to combat new variants in approximately six weeks. In the UK, the MHRA has said that “it is unlikely a full new approval process will be needed”, hastening the speed of any new vaccine to market.

The future, as ever, remains murky. But if the UK can sustain the current pace of vaccinations it would be able to give first doses to virtually all the higher-risk groups by around Easter. That really would be a turning point for health and the economy.