Financial Forecast hosted by Handelsbanken and Schroders

To access a recording of this webinar, click here.

A Financial Forecast

With Azad Zangana, a Senior European Economist & Strategist at Schroders, and Christina Nyman, a Chief Economist at Handelsbanken

To access a recording of this webinar, click here.

Christina Nyman

Christina Nyman works with Handelsbanken to regulate and produce global macro forecasts for the world economy (including home markets such as the Nordics, UK and Netherlands).

Handelsbanken have just published a global macro forecast, called ‘Hope returns’, and is based on an efficient vaccine rollout.

We have the second wave of the pandemic and yet the stock market is not reacting to this. A lot of monetary and fiscal policy is supporting the market but a vaccine may be the main cause for the strong markets. With a vaccine and a return to normal in the second half of 2021, GDP-growth forecasts are:

  • China:    2020= 2.4%         2021= 8.2%         2022= 5.3%
  • USA:            -3.6%                     1%                     3.6%
  • Euro Area:  -7.2%                     0%                     4.3%
  • Sweden:      -3.1%                      7%                     4.1%

Households have been “forced” to save due to COVID. The British public have been saving over 25% of their disposable income during 2020.

The recovery will be very strong when Governments reduce the restrictions- especially when companies regain confidence to invest.

House prices have substantially risen (up since 2019 in the UK (10%), Denmark (12.5%) & Sweden (15%)). Prices in the UK will continue to rise post-pandemic but not as quickly. ‘Working from home’ will stay and so this trend will continue.

30% of the EU’s budget is now dedicated to climate action (up 20%)

Expansionary economic policy has increased central banks’ balance sheets and Governments’ budget deficits have soared due to recovery packages.

U.S. are likely to be the first to see interest rates rise and the dollar will be stronger than the Euro

The US and Swedish economy will recover faster than the Eurozone

Azad Zangana

COVID cases in the UK are down but the death rate has not reduced as substantially.

PM Johnson has said schools will not reopen until March the 8th at least.

Israel, the UAE and the UK are topping the league tables for global vaccinators

The UK economy:

  • GDP growth -2.6% in November compared to 10% in October
  • Output remains 8.5% below pre-COVID levels
  • Inflation is close to its trough and should recover by summer
  • There is no recovery in UK GDP until early 2023
  • The Chancellor, Sunak, admits he “cannot save every job” and now hints at austerity

If a vaccine were to fail (potentially due to mutations) then we could see new restrictions introduced in the winter of 2021.

Internet sales before the pandemic were around 20% of all sales but have now risen to 32%- which should continue on an upward trend.

Business confidence has begun to rebound but not enough to encourage risk taking on balance sheets.

UK Government deficit expected to hit £400bn as debt reaches 99.4%

Brexit skinny deal:

  • No tariffs/quotas but regulatory barriers have been erected
  • No deal on trade services
  • UK companies have lost their right to offer services from outside mainland EU
  • Level playing field (although tougher than Canada and Japan)

The UK is one of the cheapest markets available and so investors are set to return. However, the Pound Sterling has failed to rebound but this may be beneficial to the equities market.

Our thanks go to Azad Zangana, of Schroders, and Christina Nyman, of Handelsbanken, for hosting this event with the BSCC

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