On the evening of the 22nd September, Boris Johnson addressed the nation once again, announcing tighter restrictions on our lives. Although the message was not as dramatic as the one delivered in March, both in the rhetoric used or the measures announced, the core message remains the same – COVID-19 is here to stay. What, then, are we looking at in the global economy as winter approaches?
The Governor of the Bank of England, Andrew Bailey, called for a rethink of the UK’s furlough scheme. As this is due to end in October, he argues that many firms will need further help from the government:
“I think it is therefore sensible to stop and rethink the approach going forward, without any commitment to what that might be.”
Industries that are forced to operate in a COVID environment which deeply harms their profits require support. As long as this continues to be in place, mass insolvencies can be avoided.
Whichever way America votes, the ultimate effect on global markets is far from clear (this has been covered in previous posts). The recent death of Justice Ruth Bader Ginsburg this week and the bitter fighting that has followed shows the social and political polarisation of the U.S. President Trump seized the opportunity to nominate a rightward ideological member to the nine-member court, with Democrats arguing that there should be no confirmation in election year. Markets in the U.S have been leaders in a strong recovery since March, with many leading indices reaching all time highs. There could now be some strong headwinds to stop this run, including the political uncertainty.
Asian markets have also faired well since March, with economic data from China continuously improving. We have been allocating more to this region over the past year and thoroughly believe in its long-term fundamentals. In the short term, Asian nations can control their populations with far greater ease than the West in response to the threat of coronavirus. Civil liberties are not as fiercely protected. In the long term, the emergence of a wealthier middle class should drive global growth moving into the 2020’s. The effect of the trade war with the U.S could be profound, but could also see a return to inwards investment, particularly for Chinese tech firms.
As the UK – and indeed, the world – continues to wrestle with the knock-on effects of the coronavirus pandemic, being secure in one’s finances has never been of more importance. If you’re looking for independent financial advice, from mortgages to investments and retirement planning during this difficult time, book a free initial consultation with one of our experts…
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We will continue to monitor portfolios on a rigorous basis.
Sources:
BBC Article ‘Bank of England boss calls for furlough ‘rethink’’ Link found here https://www.bbc.co.uk/news/business-54250662
Written by Greenfields Financial Management Ltd.
This article is for information only and should not be treated as advice. No action should be taken in respect of this article without independent financial advice. This information represents the opinion of Greenfields Financial Management Ltd. only.
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