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The Week in Review – 6 April

As COVID–19 continues its grim march across the globe, the statistics make sober reading. Last week, confirmed virus cases exceeded one million worldwide as the pandemic took hold in the United States and the global death toll continued to rise, sadly including a number of frontline workers.

With the Prime Minister remaining in isolation, Health Secretary Matt Hancock took to the Downing Street podium on three days last week, following his recovery from the virus, citing these defiant words: “We will strain every sinew to defeat it once and for all.”

A major theme of the week was testing. Government ministers faced a mounting backlash over the UK’s capability and slow increase in testing numbers. Hancock outlined a five-pillar comprehensive testing plan and set a new goal of 100,000 tests per day by the end of April, although huge questions exist over how the government will achieve that target.

Farewell Q1 – no looking back

As we bid adieu to a challenging Q1, we enter the second quarter with trepidation. On 31 March, the International Monetary Fund Managing Director, Kristalina Georgieva, addressed a conference call of G20 Finance Ministers and Central Bank Governors: “We welcome the decisive actions many of you have taken to shield people and the economy from COVID-19, that led to a decline in volatility in major financial markets in recent days. Nonetheless we remain very concerned about the negative outlook for global growth in 2020 and in particular about the strain a downturn would have on emerging markets and low-income countries. Our forecast of a recovery next year hinges on how we manage to contain the virus and reduce the level of uncertainty. Thus, we support an ambitious G20 action plan to strengthen the capacity of health systems to cope with the epidemic; to stabilize the world economy through timely, targeted and coordinated measures; and to pave the way towards recovery.”

Major European indices ended lower at the end of last week, as weak business activity data signalled an economic and earnings recession. As the infection rate climbs and countries extend national lockdowns, economists expect euro area real GDP to shrink by up to 43% in Q2. On Wall Street, main indices also traded lower as the outbreak brought an abrupt end to the record US job growth streak of 113 months, intensifying concerns of an economic slowdown.

Business support extended

On Friday, Chancellor, Rishi Sunak, extended support to mid-sized firms, with annual turnover of between £45-500m, who had been excluded from the initial business support package. With the future of many firms in their hands, British banks are being cautious. Of around 130,000 enquiries received for the Coronavirus Business Interruption Loan Scheme (CBILS) for smaller firms, only 1,250 loans totalling £145m had been made so far.

On the same side

Spring should bring an end to winter hibernation but as the sun came out this weekend, the PM took to his Twitter account to urge the public to stay disciplined with social distancing measures, to protect the NHS and save lives. Although many people are adhering to the measures, some are failing to do so. Matt Hancock warned on Sunday that the government could take further action if people continue to flout these rules.

The Queen addressed the nation on Sunday evening; an event which, apart from her Christmas message, has happened just five times in her 68-year reign. The monarch offered reassuring words and expressed gratitude to frontline workers. In an effort to rally the nation’s resolve, the Queen spoke empathetically: “I hope in the years to come everyone will be able to take pride in how they responded to this challenge. And those who come after us will say that the Britons of this generation were as strong as any.”

Shortly afterwards news broke that Boris Johnson had been admitted to hospital on Sunday evening with persistent symptoms. The PM is undergoing routine tests on the advice of his doctor.

On Saturday, Sir Keir Starmer secured victory in the Labour party leadership contest and promised to rebuild the nation’s trust in the party.

Welcome to the new tax year

Financial advice is key, so please don’t hesitate to get in contact with any questions or concerns you may have. We remain composed and professional and will continue our considered, measured approach to carefully navigate these challenging conditions.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

6 April 2020/by motive

The Week in Review – 30 March

The week everything changed

We saw a different face on the Downing Street podium on Friday afternoon, as Minister for the Cabinet Office Michael Gove took centre stage, while the Prime Minister self-isolated after testing positive for COVID-19. Gove announced plans to begin a large-scale testing programme of health workers and the construction of two further NHS Nightingale hospitals in Birmingham and Manchester.

In a video posted to his Twitter account, Boris Johnson was keen to emphasise he was suffering mild symptoms and would continue to lead the government (in the fight against COVID-19).

It’s life…but not as we know it

As confirmed cases of the virus surged, on 23 March, the Prime Minister appealed to the nation to stay at home to slow its spread. The government imposed strict restrictions on everyday life, which will be in place for at least three weeks. Mr Johnson said the country faced a “moment of national emergency” and staying at home was necessary to protect the NHS and save lives.

Chancellor casts another safety net

On 26 March, the Chancellor, Rishi Sunak unveiled much-anticipated measures to help self-employed workers in the wake of the crisis, telling them: “You have not been forgotten.”

Although stringent eligibility criteria apply, many self-employed workers will be able to claim a taxable grant worth 80% of their average monthly trading profits, to help them cope with the financial impact of the virus. Although not available until June, up to a maximum of £2,500 a month for up to three months will be paid in one lump sum. In an unprecedented level of support for the self-employed community, 95% of people who are majority self-employed will benefit from the scheme. The Chancellor added a caveat to the scheme: “I must be honest and point out that in devising this scheme it is now much harder to justify the inconsistent contributions between people of different employment statuses. If we all want to benefit equally from state support, we must all pay in equally in future.”

On the same day, as expected, The Bank of England held interest rates at a record low 0.1%.

Global fiscal measures

G20 governments have promised a multi-trillion revival effort, major central banks have reduced rates, eased monetary policy and restarted asset purchases. Once agreed, the US stimulus package helped support markets last week. After a three-day surge driven by government and central bank measures, the FTSE 100 fell at the end of the week following news of the PM’s self-isolation. In the US, a sharp increase in infections impacted markets at the tail end of the week.

Following a conference call of G20 Finance Ministers and Central Bank Governors last Monday (23 March), International Monetary Fund Managing Director, Kristalina Georgieva, commented: “The outlook for global growth for 2020 is negative, but we expect recovery in 2021. To get there, it is paramount to prioritise containment and strengthen health systems everywhere. The economic impact is and will be severe, but the faster the virus stops, the quicker and stronger the recovery will be.”

A united front

In a heartening moment on Thursday evening, UK landmarks adopted a blue hue and millions across the country took part in a Clap for Carers, as the nation showed their support for those on the front line. An emotive moment for many as we stood unified, appreciative and proud. In an astounding act of selflessness, over 750,000 people have signed up to become NHS volunteers, tripling the government’s initial request for 250,000 supporters to help the most vulnerable in society.

Communication is key

We are here to reassure you that we continue to work hard and are here to support you. We understand that although concerns exist, so too do opportunities. Financial advice is key, so please don’t hesitate to get in contact with any questions or concerns you may have.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

30 March 2020/by motive

News, The Week In Review

The Week in Review

Baptism of fire (for Sunak and Bailey)

When Andrew Bailey accepted the job of Governor of the Bank of England last year, he probably didn’t expect the first week or so in his new job would play out as it did. He certainly had no option but to hit the ground running. Following the emergency rate cut on Budget day, a second cut on 19 March saw interest rates reside at their lowest level in history at 0.1%, as the BoE took extreme measures to shore up the economy.

In addition to fighting the COVID-19 outbreak from a public health standpoint, the government are taking unprecedented action to cushion the economic impact. Another new recruit settling into his role is Chancellor of the Exchequer, Rishi Sunak, who took to the Downing Street podium on Friday evening to announce a raft of measures to protect millions of jobs. In a radical move, the government will pay 80% of the salary of retained employees, up to £2,500 a month. This follows previously announced measures, including a £330bn package to help businesses and individuals through the crisis.

Unchartered territory

As we carefully navigate the course ahead, several major central banks have moved to stabilise the financial system by ensuring there is enough liquidity to keep banks and financial markets functioning, supporting businesses and households during the downturn.

On Monday 23 March, the BoE and leading UK lenders issued a joint statement: “Your banks are rapidly getting systems in place so if you need support, we are here to help. This is an unprecedented situation, but it will pass and the economy will rebound. The Bank of England and the major banks are here to help businesses and households bridge through this difficult period and keep financial hardship to a minimum.”

Challenging conditions (but fiscal support is encouraging)

After a turbulent week on global financial markets, London’s stock market surged back into the black on Friday 20 March, as investors focused on fresh government support for companies facing financial strain. There were positive reactions the day before following measures from both the ECB and Bank of England.

Global stocks fell back on Monday 23 March after lawmakers in Washington failed to pass a funding package to tackle the economic consequences of the pandemic. Democrats and Republicans have so far been unable to agree on protective stimulus measures but are edging closer. Despite this temporary blip, the Federal Reserve have taken aggressive measures and positive fiscal steps. Like the UK authorities, they are clearly committed to providing further assistance as the situation evolves, this is encouraging.

Adjusting to the new normal

This week, many school children across England, Scotland, Wales and Northern Ireland, are adjusting to life as home learners, and many in the workforce will now be altering their work practices and everyday logistics, in an effort to restrict social contact throughout society to reduce the spread of the virus. Restrictions progress on a daily basis, as the Prime Minister addressed the nation on Monday 23 March to urge us to stay at home to protect the NHS and save lives.

As we all adjust to the new normal of everyday life, we want to reassure you that although the world faces an extended period of uncertainty and market volatility, even though it will be challenging, we are working hard and are here to support you.

We remain composed and professional and will continue our considered, measured approach to carefully navigate these challenging conditions.

Financial advice is key, so please don’t hesitate to get in contact with any questions or concerns you may have.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

24 March 2020/by motive

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