A silver lining — economy likely to hit pre-pandemic levels in 2022 

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UK schemes are getting a better handle on the nature of the pandemic’s macro-consequences. In earlier reports, many thought such effects were likely to last well into 2023. However, outlooks are improving significantly, and now our panel sees the end of 2022 as a much more feasible timeline. 



 
A smaller window for the macro-effects does not mean that we will be clear from further risks - on the contrary. Many in our panel are concerned that the government has not taken the necessary steps to prepare us for future disruptions. 
 
They are also seeing a problem in the government’s failure to stem the rise of community transmission. Westminster’s messaging has been better of late, but most remain somewhat worried by government guidance during the crisis. 


 

British public has a spring in the step as many start embracing new freedoms 

 
The country is re-opening, and many are reuniting with their friends and families. Unfortunately, the panel think it is unlikely that we get to enjoy international travel before December, but we can still holiday within the country; our panel expects we will return to UK travel as early as next month. 
 
Moving into summer and autumn, they further advise that we should not expect to: 
 
  • Attend a family gathering or see colleagues in person until June 
  • Work from the office until August 
  • Hold in-person meetings until September 
  • Attend in-person events until October 


 

When will we return to in-person events?  

 
Over half of our panel are uncomfortable about attending in-person events, but the proportion that are somewhat comfortable attending an event is rising. 
 
Some state that they will only feel safe if they have already received the jab. Others in the panel would only attend events if social distancing were in place and the venues were well-ventilated. Another interesting idea was for hybrid events that combine a webinar with low numbers of in-person attendees. 

 

Concerns are down but many covenants are weaker since the start of the pandemic 

 
The COVID concern indices are dropping further into all-time lows. And rates of professional and family concern have entered the 30s for the very first time. Panel members are also confident that the success of the vaccination campaign will continue lowering the risks to themselves and loved ones. Professional concerns are also down, but some remain hesitant, countering that it still too early for us to gauge the extent of the pandemic’s long-term consequences. 


 
Another professional concern relates to the strength of the sponsor covenant, which is weaker since the outbreak. In fact, 53% of schemes describe their sponsor covenant as weaker or much weaker. Only a third identify their covenant as unchanged since the outbreak. We will continue monitoring the pandemic’s impact on the covenant to see if this trend starts to reverse course. 

 
Are you considering an international holiday this year, and how has the pandemic impacted your sponsor covenant? Click here to tell us in our bi-weekly survey. 
 
 
Previous articles in this series: 
 
07/04: Professional COVID concerns plummet to all-time lows 
25/03: Covid concerns are down, but new risks emerge 
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.