Page 12 - Investment Outlook

United Kingdom
The BoE are forecasting a 14% fall in 2020 followed by a 15% recovery in 2021.
The UK government has stepped
in to protect the jobs of the UK workforce by promising to pay 80% of an employee’s income up to a maximum of £2,500 until October and maybe longer.
This will allow employers to stand down staff and avoid mass unemployment. Companies have the confidence to keep workers on even if they are inactive. This allows the country’s productive capacity to be quickly engaged when lockdowns are lifted and some form of normality returns. It is estimated that the furloughing scheme is expected to cost £100bn by October. The scheme is currently covering the income of 8.4 million workers. The Chancellor launched similar support to the self- employed and two million have already applied for government grants costing £2bn so far.
The UK government furloughing scheme has been a bold and important job and business retention scheme, but equally the longer lockdown measures continue, the scheme could become a delay on redundancies rather than a job saving programme. The government is expecting between 7 and 10
million workers to be furloughed in total. The numbers of furloughed workers that return to employment will depend upon how solvent their employer is and what market exists for their goods.
Actions of this nature are unprecedented and are being rolled out in many other countries. These are the actions of governments transforming the social safety net and seeking to prevent a depression at all costs. The Treasury believes that the impact
of Covid-19 upon our economy can and will be followed by a recovery. This would not be the case if millions of people were out of work and economically inactive.
The underwriting of salaries and the improvements to universal credit and housing benefits, came
just days after the Chancellor launched a range of financial measures including a £330bn government backed loan scheme, £30bn of business grants,
a 12 month freeze on business rates and £1bn in renters support. The Bank of England (BoE) has cut interest rates twice, from 0.75% to 0.25% and then to 0.1%, the lowest UK interest rate ever. On top of this the BOE originally offered mortgage holders a three-month mortgage holiday which has since been extended to six months.
ESTATE CAPITAL INVESTMENT OUTLOOK
11 EDITION 33 Summer & Autumn 2020