A high stakes game of principle chicken
This week’s edition was meant to focus on our annual outlook for the coming year, while working under the assumption that the UK and Europe would by now be operating under a ‘skinny’ trade deal that would prevent tariff hurdles to trade while also dealing with the barriers to trade that come with operating under independent regulatory regimes. Alas, at the end of last week we reached a point where insistence on political principle appears to have overwhelmed the substance of rational argument.
We usually begin our annual investment outlooks with a recap of the past 12 months, to see how our expectations from a year ago have fared. But the COVID shock smashed any hope of accurate predictions for 2020. Along with altering almost every aspect of our daily lives, the pandemic led to the sharpest global economic recession on record, with more than one-third of the world’s population placed under lockdown. Despite the efforts of governments around the world, the global economic shutdown was not a short blip in the economic calendar, and businesses all over the world have suffered – many irreparably. Back in March, when it became abundantly clear that an economic shock was in the offing, capital markets panicked into a selling frenzy and global stock indices saw their largest falls since the 2008 financial crash.