COVID-19 concerns are down but the delta variant remains a key worry
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Two weeks ago, our COVID concern indices spiked upwards, and many were worried about the delta variant and higher case rates that posed a threat to the reopening. Delta variant fears remain a prominent theme this week as well, but overall, our panel is less worried than in the last survey. Indeed, personal and professional concerns are lower, but only slightly, whereas the most notable change was in family worries, which dropped by 12%.
Expect to see further outbreaks until early next year
Younger age groups are finally starting to receive the jab. Yet despite this welcome news, there is still a lot of ground to cover before the country can achieve herd immunity. This situation is further complicated because of the recent spike in infections due to the delta variant, which could disrupt the government’s timelines for reopening the economy or reaching herd immunity. Because of these reasons our panel expects that the outbreak is likely to last until next March.
Whitehall’s travel guidance is falling short
A growing proportion of panel members are ‘very’ or ‘extremely’ worried about the way Westminster is handling the pandemic. One of the main drivers of concern has to do with the government’s travel guidance, which many oppose because it increases the risks of travellers importing foreign variants. Another common criticism is that the government is creating too much confusion by attempting to have it both ways, rigidly enforcing venue restrictions for theatres and events one day, only to turn around and advocate for the loosening of travel restrictions the next.
Mitigating the risks of larger social gatherings
Much of our panel’s initial euphoria over the easing of restrictions is now being replaced by a more cautious view. Many report that they were fortunate enough to spend some time with their loved ones after the lifting of restrictions, but the situation has changed, and they now think it would be sensible for everyone to proceed with caution until the authorities have a better handle on the risks from new variants.
To prioritise the safety of others, our panel suggests that people wait until August before we engage in larger social gatherings. They also do not think we will see a return to regular in-person meetings, live events or working from the office until later this year. The prospects for international travel are also quite dim according to the panel; they believe we are unlikely to enjoy holidays abroad until 2022.
A subdued economic recovery could pose a threat to covenants
Over a third of pension professionals report that their covenant is ‘somewhat’ or ‘much’ stronger than it was at the start of the pandemic. However, COVID-19’s economic impact has left others in a far more vulnerable position, and 25% of schemes say that their employer covenant is now weaker as a result.
Macroeconomic uncertainty poses additional challenges for schemes and their sponsors because the recovery is not happening fast enough for hard-hit sectors like travel or customer service. Further to this, if the government fails to prevent the spread of new variants, they could be forced to resort to another lockdown, which would devastate many parts of the economy. In the face of uncertain times, our panel is not confident that businesses will be capable of rebounding quickly, and therefore expect the duration of the pandemic’s macro effects to last until the end of 2023.
When will the economy recover, and what should the government do to avoid resorting to another lockdown? Click here to tell us in our bi-weekly survey.
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.
