“Like a coiled spring”: Will economic recovery revive UK equities?

With coronavirus jabs given to 15 million people in the UK and the rate of new infections falling by more than two thirds in the last month, Prime Minister Boris Johnson is ready to reveal the government's roadmap out of lockdown on Monday. The first stage will be to reopen schools in early March, followed by a gradual easing of restrictions across the rest of society.

The UK economy is “like a coiled spring”, according to Bank of England economist Andy Haldane, who believes the country is poised for a strong rebound once the lockdown eases.

London-headquartered asset manager Schroders expects that a successful immunisation programme will benefit UK equities, with value stocks to lead the pack.

But there may still be trouble ahead for the UK economy. Unemployment is forecast to rise as government support for businesses ends, and the country’s dominant financial services sector continues to be caught in a tussle with the EU over its access to the bloc’s markets.

Meanwhile, the UK’s largest companies are being called out for not complying with modern slavery laws by an investor coalition including Aberdeen Standard Investments, Man Group, and Rathbones. Rathbones’ head of stewardship said the initiative is only “scratching the surface of the pervasive problem of forced labour and human trafficking”, which affects around 25 million people worldwide.

In the US, forced labour is also rising up the agenda with a proposal to ban imports from China’s Xinjiang region, unless it is certified they are not produced with forced labour. Evidence suggests that many Uighur Muslims are being forced to pick cotton for export in the region.

This means that supply chain traceability is a crucial concern for ESG investors. Turning to blockchain solutions could improve the consistency, transparency, and reliability of their sustainability data. Ledger technology has already transformed controversial industries such as diamond mining, with diamonds now able be tracked from the mine to customer. The same solutions could apply to issues from deforestation to sustainable fisheries and childhood education, says Capco.



Madeleine Taylor
Editor, Institutional Asset Manager
maddy.taylor@globalfundmedia.com
 

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