On a positive note, Brexit is done and the vaccine roll-out commenced. However, on a negative perspective, Covid-19 infection rates are accelerating thanks to a new strain which means greater restrictions are being placed upon our everyday life.
A trade agreement between the UK and EU was completed on Christmas Eve and approved by UK parliament between Christmas and New Year. After 11 months of negotiations a deal was finally agreed – which means both parties can continue to move apart. There are bound to be hiccups early on, but this will start to close a four-and-a-half-year saga that has dominated politics. This removes a barrier from overseas investors looking to invest in the UK and the news was positive for sterling and the equity market with the FTSE 100 closing the year strongly.
With regards to Covid-19, the current trend of infections, hospital admissions and of course those that are sadly succumbing to the virus are of concern. However, for the first time since this pandemic started, we now have light at the end of the tunnel. In early December, the first Covid-19 vaccine was given and in between Christmas and New Year the AstraZeneca/Oxford vaccine was approved for use in the UK. This last point is important because this vaccine is one the UK government have pre-ordered more than any other. The battle against time to vaccinate those most at risk has started and is forecast to be completed by the end of March, which provides something to look forward to as 2021 progresses.
Against this backdrop, we continue to believe that the UK economy will bounce strongly in 2021. However, this is not expected until the second half of the year, when the Covid-19 vaccine is widely deployed and restrictions gradually ease throughout the year. The winners of 2020 might not be the same as 2021 as the economy recovers and life returns to some form of normality. Those sectors that have enabled us (technology) are less required as we return to old habits and other areas are likely to recover from depressed levels, travelling and socialising.