Macro Outlook

AndPapers Q2 2021 | The Transition to Recovery

By Investment Desk | 21 Apr, 2021

Vaccine deployment is beginning to allow pent-up demand in service industries to materialise, but with notable differences across countries and sectors.

The recent increase in the number of COVID-19 cases may be partially explained by higher global mobility, as some policymakers are prepared to loosen restrictions as long as cases remain reasonably contained.

Aside from the speed of reopening of economies, the greatest uncertainty is around how household spending will respond in 2021: will they keep saving or will they spend the substantial excess savings built-up in 2020?

My guess is that these excess savings will not be spent quickly: most savings have been accrued by higher earners (who have lower propensity to consume), and lower income households might prefer to pay back debt or improve their balance sheet.

Still, the second half of 2021 should see bumper growth in consumer spending.

In the last few months, we have seen government bond yields rising to pre-pandemic levels in the US. While higher rates are to be expected, the speed of the tightening is something to monitor. For economies with high debt levels and a lack of fiscal space, a tightening in financial conditions would slow down their recoveries and complicate things for policymakers (especially as the global economy progresses toward the next phase of the recovery: the transition to autonomous growth).

To read the full AndPapers Q2 2021 click here


Whether you have a question or would like to start a conversation about your wealth management requirements, we would be happy to speak with you. Get in touch with London & Capital via our contact form or give us a call on +44 (0) 207 396 3388. To receive more related content subscribe here.


Disclaimer: The value of investments and any income from them can fall as well as rise and neither is guaranteed. Investors may not get back the capital they invested. Past performance is not indicative of future performance. The material is provided for informational purposes only. No news or research item is a personal recommendation to trade. Nothing contained herein constitutes investment, legal, tax or other advice. Copyright © London and Capital Asset Management Limited. London and Capital Asset Management Limited is authorised and regulated by the Financial Conduct Authority of 12 Endeavour Square, London E20 1JN, with firm reference number 143286. Registered in England and Wales, Company Number 02112588. London and Capital Wealth Advisers Limited is authorised and regulated by both by the Financial Conduct Authority of 12 Endeavour Square, London E20 1JN, with firm reference number 120776 and the U.S. Securities and Exchange Commission of 100 F Street, NE Washington, DC 20549, with firm reference number 801-63787. Registered in England and Wales, Company Number 02080604.

Insights