Despite the huge rate cut and stimulus package launched by the US yesterday, the pound could still not find a leg a stand on, as it continued to fall against both the dollar and the euro.
In what has now seemingly become a race to spend the most, the UK sadly sank to the bottom of the leader board, as its response to the Coronavirus outbreak looked dangerously inadequate in comparison to other large economies. The Government in its last budget announced £12bn to combat the virus specifically and has not adopted the more hard-line quarantine measures taken by surrounding European countries. By contrast, France’s president Macron last night announced tough new lockdown laws and hundreds of billions worth of relief, following on the $700bn worth pledged by the USA on Sunday evening. Germany, Switzerland and Austria have all closed their borders and more look set to follow today. When comparing the UK response to these examples, monetarily or health-wise, it isn’t hard to see why markets are still selling the pound.
With this in mind, the Government’s daily update to the nation will today contain the Chancellor, who should, if the above example isn’t enough to scare him, issue a raft of spending measures aimed to bring the response up to scratch. The economic impacts globally are already being felt, with President Trump admitting a short recession “looks likely” How deep and long-lasting that recession is will rely on how the Government shields its citizens in these moments.
At these times, it is critical to stay in touch with your account manager, which many of our clients have been doing – in huge numbers. If you are unable to get through on the phone, then please email your account manager who can then agree a time to call you back which suits you.
Have a great day,
Joshua Haden-Jones, Senior Relationship Manager