COVID concerns are down, but new risks emerge 

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Members of our COVID research panel are less concerned about the pandemic’s potential impact on their professional lives than they were two weeks ago. This is noteworthy because the professional concern index is now lower than 50 for the first time since December and only the second time since we started tracking this. Having each of the indices below this threshold is important – signifying that members of the panel are closer to being ‘not worried at all’ than they are to ‘extremely worried’ about COVID’s risks and impacts. 
Our panel is also less concerned about the risks to themselves and their loved ones because most of them (and their families) have already received the first jabs of the vaccine. Importantly, some panel members warn that it will be quite some time until the global rates of vaccination match those of the UK. Others add that we need to be mindful of the risks of newer variants, which are thought to be more virulent than initial strains and risky for people still waiting for their jab. 


UK schemes predict a swift return to in-person activities with family and friends  

UK schemes are feeling more optimistic about prospects for seeing family, friends and loved ones in person. Indeed, our panel members expect that we will see family as soon as April, while in-person interactions with friends are likely to resume in May. 
Interestingly, our research panel expect that we could start regularly working from the office by September, a notable change from two weeks ago, when they estimated that this would not happen until late October. 
Including the expected timelines above, our research panel adds that we should not expect to: 

  • Go to the pub, attend a family gathering or travel within the UK until June 
  • See colleagues in person until July 
  • Hold in-person meetings until September 
  • Attend in-person events until November 
  • Travel abroad until December 


Shifting expectations for the pandemic’s macro consequences 

Pension professionals estimate that the macro effects of COVID-19 will last at least until July 2023 – three months sooner than the panel’s expectations two weeks ago. Some within our panel warn that economic effects could be long lasting and difficult to predict given the high rates of public debt that will eventually need to be paid off. 
However, another take on macro consequences centres on mortality rates, which some believe provide us with a much clearer picture about the duration of the pandemic’s impact than the economy can. In fact, it is suggested that we might even know the extent of COVID’s effect on mortality within only a couple of years; whereas with economic consequences, it may take much longer to sufficiently gauge the damage. mallowstreet will continue monitoring these data in the coming months to see if our research panel continues to adjust their duration expectations even further. 


A majority expect near-term rises in tax rates and inflation 

A large proportion of pension professionals in our panel expect inflation to rise in the near-term; none of our panel predict rates of inflation to fall. Interestingly, some qualify that inflation will not be systematic but rather the result of short-term ‘idiosyncratic’ reasons – for example, related to the working environment we will encounter in a post-COVID world. Another perspective on inflation is that rate rises will coincide with new capacity issues. 
At the same time, our tax and interest rates indices have both jumped from where they were two weeks ago. Much of the expected increases to tax rates can likely be attributed to the announcements by HM Treasury earlier this month. Interest rates, on the other hand, remain a point of contention – with over half of our research panel predicting a near-term rise, contrasted by the 46% expecting rates to hold steady. 


Communication services are in position to thrive in the post-pandemic economy 

Of the industries poised to win out after the pandemic, communication would usually be rated as second or third below either healthcare or information technology (IT). As of today, this is no longer the case, and communication services are now rated at the very top of our sector sentiment ‘winners’ indices. Additionally, 96% of the COVID panel believe that communication services will emerge from the pandemic as a winner, with only 4% being neutral in their outlook for the sector. 
Another noteworthy change affects IT, an industry that, though often scored highly in our ‘winners’ indices, was in the midst of a downslide in February. This trend appears to be reversing, re-establishing the sector’s reputation as an economic winner. 

How long do you expect the macro effects of COVID-19 to last, and which industries would be most negatively affected? Click here to tell us in our bi-weekly survey. 
Previous articles in this series: 
11/03: Concerns over the pandemic’s lasting impact on the world of work are growing 
24/02: Pension professionals urge caution as vaccination efforts continue 
12/02: High vaccinations rates bring down COVID-19 concerns 
27/01: COVID-19 concerns at an all-time high 
13/01: New COVID-19 strain makes pandemic spiral out of control 
15/12: Another COVID summer on the cards despite vaccine rollout 
02/12: Divergent COVID-19 concerns show different realities 
18/11: The risks and consequences of COVID-19 complacency 
04/11: Sharp rise in COVID-19 concerns before the second lockdown in England 
22/10: COVID-19 outbreak to last at least until June 2021 
07/10: Prolonged COVID-19 outbreak is putting pressure on covenants 
23/09: How will the second COVID-19 wave impact UK schemes? 
17/09: Trust in UK government dwindling due to COVID-19 
26/08: Another step in adjusting to COVID-19 uncertainty? 
19/08: COVID-19 outbreak to last at least until February 2021 
12/08: Trustee sentiment around COVID-19 pandemic deteriorates 
05/08: Relaxed attitudes towards COVID-19 threaten economic recovery 
29/07: Does COVID-19 mean the ‘end of the world as we know it’? 
22/07: COVID-19 could weaken covenants and raise taxes and inflation 
15/07: COVID expectations set, except for economic recovery 
08/07: COVID concerns rise as economic outlook improves - why? 
01/07: Lockdown easing raises COVID concerns 
24/06: The UK government’s COVID-19 guidance attracts criticism 
17/06: COVID concerns shift to life after lockdown 
10/06: Will lockdown easing cause COVID concerns to rise? 
03/06: COVID concerns at an all-time low – is the worst over? 
27/05: Personal COVID concern subsides – but this may be a problem 
20/05: UK pension trustees worry there may be no ‘going back’ after COVID 
13/05: UK pension schemes don’t trust the lockdown exit strategy 
06/05: Concerns over duration of COVID lockdown and macro effects intensify 
29/04: Professional COVID concern spikes by 18% as trustees brace for a longer lockdown 
22/04: Macro effects of COVID to last until 2022, with personal concerns up by 10% 
15/04: COVID concerns fluctuate – there is no path to normalisation in sight 
08/04: The magnitude of COVID’s economic impact remains unclear 
01/04: Have UK pensions schemes settled into the ‘new normal’ of COVID-19? 
25/03: Rising levels of concern about COVID and a changing economy 
23/03: What do pension funds think about the economic impact of COVID-19? 
19/03: COVID-19: Government response divides pensions community 
18/03: 96% of pension funds and trustees preparing for a long-term COVID-19 fallout 
18/03: mallowstreet Flash Insights Report: COVID-19 – what’s on trustees’ minds 

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 = all respondents think rates will fall 
  • 0 = all respondents think rates will stay the same 
  • +100 = all respondents think rates will rise 
Sector sentiment index: 
  • -100 = all respondents think the sector will be a ‘loser’ in the pandemic 
  • 0 = all respondents see a neutral outlook for the sector 
  • +100 = all 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.