COVID concerns rise as economic outlook improves - why?

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As we enter the first week of ‘unlocking’, personal worry is up by 7%, and professional concerns by 8%, heading for levels last seen in the middle of lockdown. If rules are being eased because the situation is improving, then why are UK pensions professionals increasingly worried?
 

Has the UK government learned from past mistakes? 


Nearly 55% of our respondents are ‘very’ to ‘extremely’ worried about the UK government’s latest COVID-related guidance. This proportion has increased by 10% from last week. The cabinet is not learning from objective analysis and past experience, say survey respondents who feel that a better assessment of the risks of public transport, international travel, and reopening schools and pubs is needed.
 
Some respondents say inconsistencies make COVID-19 rules confusing and hard to apply, for example schools remain mostly closed, but pubs have reopened with a bang. 

However, anything stricter than current rules may turn the UK into a ‘police state’, claim other respondents, feeling that there is little more that can be done except to trust people’s common sense. 

Be careful when others are not 


The lack of trust in both the government and individual responses to the evolving global pandemic is pushing the optimistic estimate for the end date of the outbreak further and further out into the future, now nearly to the end of November.
 
While the relaxation of rules makes sense to some, human behaviour could cause the rate of infections to rise again. Local outbreaks are already occurring, with Leicester now dubbed ‘COVID capital’, likely increasing pressure on local authorities. 

Has the UK pensions industry digested the risk of recession?  


Brexit and recession risks are material – some pension funds will inevitably lose their sponsors and enter the PPF. While the exact economic impact remains unknown, the minimum duration expected by respondents has reduced by a further 15% from last week, painting an optimistic view of summer 2022.
 
This is surprising given that the UK and global economy is not operating at previous capacity, so recovery expectations should be deteriorating rather than improving. Have UK pension schemes made peace with the ramifications of the virus? 

Our weekly survey shows that 42% now say that the economy will be ‘very’ different after the coronavirus pandemic. This figure had started to decrease as lockdown easing began but is now rising once more. And while our research panel has no problem identifying the sectors that will suffer the most, we are reminded that we need to live with the virus until a vaccine is found.
 

Why has the economic outlook improved so much in your view? Click here to tell us in next week’s survey. 


 

Previous articles in this series: 


 

About the COVID Concern Index 


This short weekly survey helps gauge sentiment of our community on the pandemic. The results are distributed each week via the community newsletter. 

The COVID Concern Index values should be used as indication only and do not constitute advice. Their values are bound by the choices available in the survey on which they are based. 

COVID Concern Index:                                         

  • 0 = respondents are not worried at all                           
  • 100 = respondents are extremely worried                     

Expected minimum duration of outbreak:                                 

  • Lowest possible value = 1 month                      
  • Highest possible value = 6 months                    

Expected minimum duration of macro effects:

A methodology change took place on 15/04/2020, affecting data from 21/04/2020 onwards. 

Prior to 15/04/2020:              

  • Lowest possible value = 3 months                     
  • Highest possible value = 12 months                 

Following 15/04/2020:          

  • Lowest possible value = 3 months                     
  • Highest possible value = 60 months                 

Concerned about the coronavirus outbreak and its macro implications? Click here to take part in the weekly COVID-19 survey.