February 22, 2021
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UK: lockdown exit-road full of GDP peril

  • The beginning of the third national lockdown’s end on 8 March will see the return of conditions equally as tight as during the second one from November. UK GDP should recover by a few per cent in March but we still see it down by 4.5% q-o-q in Q1.
  • Further easing is extremely gradual with remaining restrictions only planned to end on 21 June if everything goes to plan. The UK is failing to capture a relative economic dividend from its relatively successful vaccination programme, despite bullish pricing.

February 11, 2021
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EU: no relative vaccination success

  • The UK has administered far more vaccine doses than the EU, but it is all happening too late to impact infections this winter. Seasonal warming in Spring should anyway allow restrictions to loosen and growth to rebound irrespective of relative vaccine rollout.
  • Vaccination is crucial to avoid a repeat of recent measures next winter. The UK and EU should both have completed their programmes by then. There is no significant economic advantage of the UK’s more advanced vaccination programme, in our view.
  • Covid-19 will not be eradicated and flare-ups are still likely to trigger severe localised restrictions even next winter. Higher sensitivity to viral infection is the new normal.

February 03, 2021
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Italy: Dragging in Draghi

  • Political turmoil had returned to Italy, with the President scrambling to find an agreeable new Prime Minister. A resolution in the form of a technocratic government led by former ECB President Mario Draghi now looks set to be formally agreed.
  • The democratic deficit of another technocratic leader is likely to strengthen populist pressures. However, the postponement of election risk is a relief to markets, especially with such a well-respected figure being invited to the helm.