As Boris Johnson announced his roadmap out of lockdown this week, most of us were perhaps thinking more about our general wellbeing, rather than specifically our finances. But when the dust settles, the decisions the Government has made may have profound implications for our investments too, especially if many of them are in the UK.
Mr Johnson’s slow, but hopefully irreversible, unlocking strategy, combined with the vaccine drive, may give certainty to some of Britain’s business sectors, but there’s a fear that even some of the big household names that many of us hold in our pensions and ISAs might struggle to weather another spring of restrictions.
Then there’s continued cost to the Treasury of propping up businesses with the furlough scheme, continuing to pay more Universal Credit and dealing with a likely spike in joblessness in coming years.
For savers and investors, ensuring you are correctly positioned should ensure you benefit from economic recovery, and speaking to an expert adviser may give you ideas about how your portfolio should react.
The speed of recovery
With vaccine rollout already so far through, it seems like the end is in sight. However, with the Government’s plans stressing no hospitality businesses to open indoors until May 17, some sectors of the UK economy are likely to struggle.
Boris has pledged that support will continue for businesses until the restrictions are over, but no details have yet been given. The roadmap as it stands, though, with all restrictions on socialising gone by June 21, will be an encouraging sign for many that the UK may enter a period of strong recovery.
A ‘Roaring Twenties’?
One scenario investors might want to consider is a ‘roaring twenties’ where pent-up demand for experiences that we could not have during lockdown comes through immediately. This would mirror the post World War I and Spanish flu era, and could have a significant effect on investments.
Companies that have done well in lockdown, such as those providing technology and takeaway services may struggle, while those in hard-hit leisure sectors may rise.
There are still question marks over international travel, however, which may mean that strong resurgence for some badly hit stocks is off the table until later.
But there are still risks that economic momentum may be dulled by continued unemployment and low consumer spending, meaning a slower recovery which could have an impact on investments.
Navigating possible scenarios
While Boris’ roadmap brings some certainty for those in business, for investors there are still plenty of uncertainties ahead. The Budget may bring more certainty on how Rishi Sunak plans to balance the UK books, but it is likely to be a tricky time for those of us attempting to time our own investing for the best.
Individual investors may wish to follow established investment guidelines. Regular investing is one way to smooth out volatility along the way, particularly if targets are missed as we go through Boris’ four-phase plan.
Picking companies with a strong leadership and balance sheet will also help ensure a lack of nasty surprises, while keeping an eye on sustainability may also help, with many predicting a slew of ‘green’ initiatives before Britain hosts the UN Climate Change Conference (COP26) in November.
Diversification will be important in the coming months, as the true cost of the pandemic to Britain’s firms, and the extent to which lockdown has permanently changed consumer behaviour, becomes clear.
For those who feel daunted by the changing landscape, using an expert financial adviser who can ensure your portfolio fits the economic circumstances as well as your own may seem like a wise move. Having an expert, such as an independent financial adviser, to map out your individual investment roadmap could help you to negotiate what could still be a bumpy few months, but with potential rewards along the way.