Deficits, debt in The Monday Briefing
Global slump, equity boom
Strange though it might seem, amid the greatest economic downturn since the Depression, equities have soared. Markets had a dreadful start in 2020. The dawning realisation that the world faced a global pandemic triggered a crash, with global stocks losing a third of their value in the five weeks to 23 March. Since then, equities have staged a comeback, rising by 70% and shrugging off a rising death toll, the discovery of new, more contagious variants of the virus, further lockdowns, Brexit and America’s political turmoil. The world economy is significantly smaller today than it was a year ago, while global equity markets are 12% higher.
So why, late last March, on the verge of one of the largest downturns of modern times, did investors start to buy equities, and why have they continued to do so?
The answer lies in the aggressive response of governments and central banks to the pandemic. By cutting interest rates and undertaking more quantitative easing, central banks have poured liquidity into the system and boosted equity values. (A lower discount rate increases the present value of a future stream of dividend income and so raises equity values.) Massive government spending has supported jobs, incomes and companies, mitigating the damage to the economy from the recession. With governments and central banks apparently prepared to print money and borrow and spend without limit, growth, and profits, so investors reason, are bound to come back.
Is the economic emergency beginning or ending?
Join our next fortnightly COVID-19 webinar on Thursday, 3 December, at 13:00 GMT. We will discuss the impact of COVID-19 on the future of the city and what this means for the high street. Register here: https://event.webcasts.com/starthere.jsp?ei=1365454&tp_key=8f4d835e66&sti=mmb
Deloitte Monday Briefing: US elections, UK lockdown
Faced with choosing to write about the US elections or the lockdown in England in this week’s briefing we are doing the obvious thing and covering both.
The age of government activism
Join our next fortnightly COVID-19 webinar, focussing on building resilience, on Thursday, 5 November, at 13:00 GMT: https://event.webcasts.com/starthere.jsp?ei=1365454&tp_key=8f4d835e66&sti=mmb
Governments around the world have responded to the pandemic by borrowing, and spending, on a vast scale, equivalent to 12% of world GDP. Twelve years ago, in the financial crisis, monetary policy did the heavy lifting in supporting growth. Now, with interest rates near zero, the burden has fallen on fiscal policy.
The long COVID recovery
Join our next fortnightly COVID-19 webinar on Thursday, 22 October, at 13:00 BST where we will cover public health and economic developments in China, Germany and the UK. Register for this and our upcoming webinars: https://event.webcasts.com/starthere.jsp?ei=1365454&tp_key=8f4d835e66
From job retention to job support
The COVID-19 Economics Monitor provides a succinct, easy-to-navigate guide to the global health, economic and financial impacts of the pandemic: https://www2.deloitte.com/uk/en/pages/
finance/articles/covid-19-economics-monitor.html
Governments across Europe face a hard balance between public health and economic activity as they combat a resurgence in COVID-19 cases.
US election - polls, prospects, risks
Join our next COVID-19 webinar this Thursday 24 September, 13:00 BST with our regular speakers Ian Stewart and Karen Taylor assessing where we stand on the economy and public health. We will also be joined by Rick Lester, COO, Risk Advisory, and Paul Lee, global head of TMT research, discussing the return to work and how it’s been assisted by technology. To register for this 30-minute webinar please visit: https://ukinfo.deloitte.com/
iLRR02GtA1w00Q005Qm2I0U
Analysing the latest health data
A personal view from Ian Stewart, Deloitte's Chief Economist in the UK. To subscribe and/or view previous editions just google 'Deloitte Monday Briefing'.
What happened over the summer
Following a break over the summer our COVID-19 webinar returns this Thursday, 10 September, at 13:00 BST. Our regular presenters, Ian Stewart and Karen Taylor, will assess where we stand on the economy and public health as we head into the final quarter of the year. To register for this 30-minute webinar please visit: https://ukinfo.deloitte.com/kR0Ew0250MA02GQmQr01U0I
Shocks, recessions and recoveries – lessons from history
In their response to the pandemic, Western governments have learned and applied many of the lessons of past crises.