High vaccinations rates bring down COVID-19 concerns 

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UK pensions professionals are growing less personally concerned with the risks of COVID-19 – worries have dropped 20% from the previous bi-weekly survey. Some within our research panel state that receiving the vaccination is their central reason for feeling less personally concerned. After all, the UK now ranks third globally in terms of COVID-19 doses administered, trailing only Israel and the UAE. 
 
Other panellists show a greater concern for the safety of groups that are not vaccinated yet or unable to get the vaccine for health reasons. The professional and family concern indices dipped as well, though a few commented that they are feeling increasingly isolated due to extended home confinement and the lack of social engagement with family, friends and colleagues.



Outbreaks of COVID-19 will continue well into the latter half of 2021 

 
UK pensions professionals expect the global pandemic to continue even longer than in earlier editions of our bi-weekly survey. Many are not expecting the outbreak to abate for several months, increasing the likelihood of another winter with COVID-19. In time, we will see whether the efficacy of vaccines will decrease the minimum expected duration for the pandemic.  

 

Expectations for a quick return to social activities remain low 

 
The COVID research panel remains doubtful about prospects for a swift return to social activities, projecting that, at best, we can hope to start seeing family members again in person by June. Though some express concerns that key industries like retail, hospitality and travel will be irrevocably harmed by the prolonged lockdown, others caution that moving too quickly to re-open venues for social activities would actually add more time to the recovery’s overall duration. Our panel concludes that, as well as not seeing family until June, we should not to expect to: 
 
  • Meet friends, travel within the UK or see colleagues in person until July 
  • Go to the pub until August 
  • Attend a family gathering or work from the office until September 
  • Hold in-person meetings until October 
  • Attend in-person events until November 
  • Travel abroad until January 2022 

An improving outlook for the sponsor covenant? 

 
A quarter of UK pension professionals now report that their sponsor covenant has strengthened since March 2020, a 15 percentage point difference from two weeks ago. It remains to be seen whether this is a sustained trend, but the deviation from the long-term trend in this statistic is noteworthy.  

Opinions about the UK government’s pandemic response show signs of improvement 

 
UK pension professionals are less worried about the British government’s handling of the pandemic. In fact, the proportion of those only ‘somewhat worried’ or ‘not worried’ about the government’s guidance is now above 50%, though some remain frustrated by the ‘messy’ changes to international travel rules. Nevertheless, the latest data from our bi-weekly survey suggests a growing faith in the way Downing Street is handling the vaccine rollout and lockdown measures.
 

Government borrowing will drive up interest rates 

 
UK pension professionals are broadly maintaining their views on tax rates and inflation, with a significant majority expecting both to rise over the next 1-2 years. This prediction is largely in step with earlier trends recorded in our macro rates indices (see chart further below).  Our panel suggests that inflation could rise as a result of exchange rates and tax duties, but other tax increases may prove unavoidable given the cost of the pandemic so far. 
 
However, opinions are split regarding a potential rise in interest rates. Half of our COVID research panel believes they will rise, while the other half expects them to stay the same. Some justify their expectations for an interest rate rise, pointing to their historically low levels. Others believe that the current government’s ‘enormous borrowings’ will eventually force an uptick in interest rates.
 

 
How have your expectations for the next 1-2 years been affected by the ongoing COVID-19 outbreak? 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 = 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.