A week seems a long time in our lives and markets at the moment – particularly when we remain in lockdown. As time passes, individuals’ and companies’ thoughts are moving to how we emerge from the lockdown. The UK is not alone and the big trend around the world is to ease the lockdown gradually. The British Chambers of Commerce Coronavirus weekly survey stated that most firms believe they could be ready to restart business with just three weeks’ notice. Even when businesses do re-open – it’s not going to be life as we know it – changes need to be made to the way we work/interact and social distancing remains firmly in play.  
 
As we think about the end of lockdown so does the government in terms of the support that it’s offered; UK Chancellor Rishi Sunak is considering his options on tapering off the government’s furlough scheme which is supporting workers staying at home during the Coronavirus outbreak. There are some concerns over the cost of the programme, with the latest government figures showing 6.3 million people are having up to 80% of their salaries paid by the Treasury at a cost of £8 billion. The Times reported that Mr Sunak will announce plans next week on how to wind down the scheme from July, with options including cutting the subsidy level and lowering the £2,500 cap on monthly payments. But Treasury sources insisted that “no decisions have yet been taken” over the scheme.
 
Do you miss talking and thinking about Brexit? Britain and the US are to begin negotiations on an “ambitious” post-Brexit free trade agreement. International Trade Secretary Liz Truss and the US trade representative Robert Lighthizer will open the talks with a video conference call this week.
 
The impact on businesses from the Coronavirus continues to feed through into the news with Virgin Atlantic announcing it is to cut more than 3,000 jobs in the UK and end its operation at Gatwick airport.  Last week we saw one of the biggest dividend paying companies, Royal Dutch Shell, dramatically cut its dividend and this continued the theme of dividend cuts from major FTSE 100 companies. This was the first time they had cut its dividend since World War Two following the collapse in global oil prices as a result of geopolitical issues in oil supply coupled with a fall in demand due to the Coronavirus pandemic. Equity income stocks and the funds that have this type of investment style have been hard hit during the Coronavirus – but that doesn’t mean they don’t have a place in a portfolio.

Alex Brandreth
Chief Investment Officer

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