COVID-19 outbreak to last at least until June 2021 

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The expected minimum duration of the pandemic has been just under six months since mid-August – the maximum possible value for this metric. We therefore made a methodology change, which now reveals that UK pension professionals do not expect the outbreak to subside within the next eight months – not until at least June 2021. 
 
 
 

A familiar enemy 

 
Despite the 37% increase in the expected minimum duration of the COVID-19 outbreak, concern indices have remained relatively stable over the last two weeks, registering only small 2-4% increases. This suggests that UK pension professionals now view the virus as a familiar enemy – not the big unknown it was in March this year. 
 
 

But are ongoing risks managed well? 

 
Over half (54%) of UK pension professionals are now ‘very’ to ‘extremely’ worried about the UK government’s handling of the pandemic – the highest proportion since we started tracking opinions on this topic. Our research panel thinks there is a growing reluctance to follow ‘unjustified’ and ‘often contradictory’ restrictions, which are jeopardising long-term economic growth. With the test and trace system ‘in shambles’ and NHS hospital capacity at risk once again, opinions on UK government guidance may deteriorate further. 
 
 
 

Unknown impact of no-deal Brexit 

 
The macro rate indices have taken a dive, but what is behind these changes? 
 
A growing proportion of UK pension professionals expect inflation to stay the same rather than fall or rise. This hesitation seems to reflect the unknown impact of a no-deal Brexit amidst a global pandemic. Some say inflation will rise due to post-Brexit tariffs, but others say they will be offset by otherwise deflationary pressures. 
 
Tax rates are increasingly unlikely to rise meaningfully within the next year or two, according to our research panel. But the UK has been borrowing at unprecedented levels to make tomorrow possible. As higher taxes cannot offset debt in the near term, 25% of UK pension professionals expect interest rates to go even lower, so that the UK government can at least continue servicing its debt. This proportion has risen from 7% two weeks ago. 
 
 

Renewed optimism in leading sectors 

 
Momentum in IT, healthcare and communication services has picked up again, as a greater proportion of UK pension professionals see them as ‘winners’ in the COVID-19 outbreak. The outlook on consumer discretionary and energy has deteriorated, while views on real estate, industrials and materials are less negative than before, but we would like to see meaningful and sustained changes before drawing any conclusions. 
 
 
 
 
 

How have your expectations evolved during the COVID-19 pandemic? Click here to tell us in our bi-weekly survey. 

 
 

Previous articles in this series: 

 
 
 

About the COVID Concern Index 

 
This short survey helps gauge sentiment of our community on the pandemic. The results are distributed via the community newsletter. Until 31/08/2020, this was a weekly survey. From 01/09/2020, the survey shifted to a bi-weekly cadence. 
 
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: 
 
A methodology change took place on 06/10/2020, affecting data from 20/10/2020 onwards. 
 
Prior to 06/10/2020: 
 
  • Lowest possible value = 1 month 
  • Highest possible value = 6 months 
 
Following 20/10/2020: 
 
  • Lowest possible value = 1 month 
  • Highest possible value = 12 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 
 
Macro rates index: 
 
  • -100 = respondents think rates will fall 
  • 0 = respondents think rates will stay the same 
  • +100 = respondents think rates will rise 
 
Sector sentiment index: 
 
  • -100 = respondents think the sector will be a ‘loser’ in the pandemic 
  • 0 = respondents see a neutral outlook for the sector 
  • +100 = respondents think the sector will be a ‘winner’ in the pandemic 
 
Concerned about the coronavirus outbreak and its macro implications? Click here to take part in the bi-weekly COVID-19 survey.