DEFLECTION

Monday 3rd May 2021

One of the things that has struck us over recent months is seeing the art of deflection practiced so well, and we feel it is an unfortunate consequence of Covid.

The European Union are the obvious example, with vaccine incompetence being blamed on poor Astra Zeneca, who have produced a low cost vaccine at no profit, and of course the knock on effect to blame the UK. As the European pace of vaccinations has increased (Germany exceeding one million doses yesterday) the blame game dissipates and indeed Europe is now looking to entice us there on holiday. Listening to Nicola Sturgeon on Radio 4 this morning was another classic example of deflection, as the SNP have evidently not thought through, and cannot answer, some of the key independence questions, and therefore position it that now is not the right time due to us dealing with Covid.

Big organisations likewise are quick to blame coronavirus on their inability to answer the phone within the hour. Some have already started the process of closing offices to accommodate home working under the guise it will be the "new normal" and be good for staff morale and flexibility. In reality it is to save costs, and of course they are hoping that we ultimately get used to the poor service and it becomes the norm, similar to how we now seem immune to the political sleaze of recent decades.

Our experience is, that whilst we are lucky to be in a business where we could work effectively from home, it was 80% of the pace we would like. Having our staff fully back in the office has been a major boost to see them working and socially interacting. That collaboration makes the ease, speed and understanding of communication so much better. How do youngsters starting on a career learn, grow and socially interact sat in a bedroom on a computer with a call queue stacked up? There needs to be a balance and flexibility of some home working will no doubt be a sensible option going forward, but to write off the office return is naïve at best.

The roaring twenties

Depending on where you are in the world, for the first quarter of 2021, you would have been living through varying degrees of lockdown and vaccine rollout. Since the start of this year however markets have predominantly ignored the ongoing lockdown, and instead have focused almost entirely on the vaccine's impact on future economic recovery. As vaccine rollout in the UK and US started to ramp up in early February, investors began to look through the increasingly political vaccine-related noise to a post pandemic world in which countries are back open, and economic recovery is in full swing. It is expected that within a few months we will be knee deep in the roaring 20s, an environment of expansive growth and bounce back activity.

Last week markets fell in the face of increasing reports about overheating stock markets, alongside the powerful resurgence of Covid in India. In addition, there were headlines on tax rises for investors in the United States, particularly Capital Gains tax for those earning over $1 million. One question is if this sets the scene for Rushi Sunak to follow suit, particularly with the review of both Capital Gains and Inheritance Tax still in the wings. The US leads the way and we appear to be following quickly. Barclays Group Chief Executive today predicted the biggest economic boom since 1948, thanks to the Covid vaccine rollout and pent-up demand from consumers who have saved money and are now ready to spend as we come out of our worst recession since World War II.

Our thoughts haven't changed, in that we see a strong upswing in economic growth and activity and are conscious of the main benefit of Covid (and indeed Trump's departure) of a quicker and successful transition to a lower carbon global economic model of growth and development. Sustainable funds are not only good from the environmental aspect, but importantly for investment potential too. Whilst it is easy to think about 'green' investments as electric cars, there are a wealth of different sustainable investment opportunities.