The success of the various vaccines means that there may be light at the end of the tunnel for the pandemic itself – but what about the financial effects?
Covid delivered an economic shock to the whole world. Many countries went into months of lockdown to stem the spread, central banks around the world slashed interest rates and injected money into the financial system. Governments increased spending to cushion the economic damage.
But at Continuum we believe that recovery may be on the way and that it could be time to start taking advantage of the potential that offers.
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Is recovery on the way?
There is no denying that the Covid crisis has cost us all dearly. Many sectors were locked down completely and have seen cancelled orders and reduced customer numbers. Financial markets saw frightening falls.
But markets may have already regained much of the ground they lost. Now with the tide turning, prospects may be looking very positive indeed.
The rapid rollout of Covid-19 vaccines has led to business confidence hitting its highest levels in three years. According to IHS Markit’s global business outlook survey, business confidence now stands at +32% up from +26% in October.
The Bank of England’s chief economist Andy Haldane has gone so far as to suggest a rapid economic recovery could soon be underway – likening the current economy to a coiled spring. The BoE is cautious, keeping interest rates at their current historic lows to avoid derailing any resurgence, but his words might suggest that there is potential waiting to be tapped into.
So how could you profit from recovery?
Keeping your money as cash may look safe after the dramatic falls of 2020, but with bank rates low and with the potential of going negative, savings accounts will offer little interest. Worse, inflation is likely as recovery starts to gather pace. Having money in a savings account may mean steadily losing its real value.
Investment may be the solution – but where and how should you invest?
The recovery may not arrive for all sectors at once – and for some, such as high street retailers, it may not come at all. The Covid crisis may have permanently altered the UK economy, with online businesses already emerging as winners.
Healthcare seems to have been boosted by the crisis. Manufacturing may be ready for increased order books. Services – which make up around 75% of the UK economy by some measures continued to be affected by the pandemic in January, actually shrinking with the lockdown – but may be ready for growth as the recovery gathers speed. Energy and commodities often benefit as markets and demand expands.
But you may need help to identify the investments that offer the best prospects for growth in what will be a changed world. It could be time to spread and diversify rather than trying to predict stock market movements.
Your own investment plans need to be based on your own circumstances and plans – as well as the shape you expect recovery to take.
Getting the support of an investment expert may be vital to enjoy the real rewards of the recovery and at Continuum we will be happy to sit down with you and put that expertise to good use – helping you make the most of the recovery, whatever direction it takes.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to investment strategy, you should seek independent financial advice before embarking on any course of action.
The value of investments can fall as well as rise and you may get back less than you invested.
Equity investments do not afford the same capital security as deposit accounts.
Coronavirus and the impact on output in the UK economy – Office for National Statistics (ons.gov.uk)
