Impact of Covid-19 on the economy has not yet fully emerged, says new study

Global downturn

Around two thirds, or 65 per cent, of investors believe the fallout from Covid-19 will be worse in 2021 than it has been this year, according to a recent study by HYCM.

The survey included 885 UK-based investors and focused on their outlook on how Covid-19 and Brexit are affecting their financial plans for 2021.

It revealed that once a vaccine is available, 43 per cent say they plan to invest into those sectors worst-affected by the pandemic, such as travel and hospitality, while 58 per cent of investors want to see the Brexit deadline pushed back from 31st December to allow for more negotiating time following the pandemic fallout.

“With 2021 fast approaching, it is clear investors are preparing for another year of market volatility as a result of Covid-19. What’s more, investors are quite reasonably fearing that the worst is yet to come with regards to the pandemic’s economic damage,” said Giles Coghlan, chief currency analyst at HYCM.

“The arrival of one or more vaccines will be an interesting development. Once this happens, I’d anticipate a flurry of activity on the financial markets as investors hope to take advantage of sectors posed for recovery,” added Coghlan.

The research was released on the back of Chancellor Rishi Sunak’s Spending Review, in which he announced that the UK economy is due to contract by 11.3 percent in 2020.

Therefore three in five, or 60 per cent, of the investors surveyed plan to focus on security rather than returns in the coming 12 months, while 62 percent will wait until a vaccine is rolled out before making any major decisions, the research showed.

A third of investors believe the renewable energy trend will continue growing in 2021, which has “no doubt been influenced by both Prime Minister Boris Johnson and US President-elect Joe Biden both tabling ambitious green strategies recently,” commented Stavros Lambouris, CEO at HYCM International. “This will be a key trend to watch in 2021,” he added.