Charlotte Street Partners



Hold the champagne

Written by Li-Ann Chin, associate 
Edited by Kevin Pringle, partner
8 February 2021

Good morning,

For those in search of optimism, a statement from Andrew Bailey, Bank of England governor last week provided brief respite. With more than 10 million people vaccinated so far, the bank predicts that a “rapid” Covid recovery is likely in the second half of this year.
Britain’s economy is expected to suffer a four percent decline in the current quarter as the third lockdown bites. However, a double-dip recession will be avoided after a smaller hit in the autumn than feared. Current restrictions will be lifted gradually from April and largely gone by autumn, the Bank forecasts, helping output to recover towards pre-pandemic levels by early 2022.
But let’s not get ahead of ourselves. There is still the long-term problem of national productivity we have to contend with – the ultimate source of rising prosperity – as David Smith, economics editor of The Sunday Times points out. In the years following the financial crisis of 2007-08, productivity and real wages stagnated while employment rose considerably. In early 2020, it was revealed the slowdown in Britain’s productivity growth over the last decade was at its worst since the start of the Industrial Revolution.
Actual growth figures, he argues, will be largely distorted over the next few years. Even if we do see strong quarterly and growth figures come spring, all they will signal is the economy merely getting back on its feet after the pandemic. But nothing will have happened to raise the trend growth rate. Productivity figures will similarly come across as misleading, with little to suggest a change in the underlying inclination.
The good news? In aiding the UK’s transition towards a post-Brexit economy, the government is well aware of the need for increased productivity-boosting policies. Indeed, we have seen hints of it already, in the £3 billion green recovery plan unveiled in July 2020 and in the £2.9 billion Restart scheme designed to boost employment. But with a ballooning deficit and the chancellor now facing mounting pressure for extended financial support in the lead up to the spring UK budget, difficult decisions will have to be made in choosing between allocating funds for immediate life support vs. long-term economic growth.


Tens of thousands of young people massed in Yangon and other cities in Myanmar for a second day on Sunday to join the largest protest in the country since 2007, defying the junta’s attempt to choke off the spread of news and dissent by shutting down most of the country’s internet. According to a live video and social media posts, shots were fired in the south-eastern town of Myawaddy, as police sought to break up a protest.
Following 550,000 first jabs given out on Saturday, more than 12 million people in the UK have now had at least one dose of a Covid vaccine. By 15 February, the government aims to have offered first doses to 15 million individuals in the top four priority groups.
A report by education group ImpactEd that tracked 62,000 students for seven months, assessing their learning, attitudes and wellbeing, has revealed that GCSE and A-level students have been hardest hit by Covid-19. One in four GCSE students said they could not get help from their families, and many struggled to settle into a work routine, with disadvantaged pupils falling even further behind their peers.

Business and economy

According to recently published figures from the Road Haulage Association, UK exports through sea freight to the EU in January plummeted by 68% compared to last year, with 75% of lorries coming over from the EU returning empty. Delays on the UK side or companies choosing to no longer export to the EU due to difficult new customs processes have been cited as the main reasons for this.
Christine Lagarde, president of the European Central Bank, has said the region’s economy will need to be weaned off its fiscal and monetary stimulus “gradually” to avoid repeating past mistakes in previous crises when support was withdrawn too quickly. However, she maintains that Europe’s “economic recovery has been delayed, but not derailed” and that 2021 will be a recovery year, even if uncertainties persist. (£)
Online fashion giant Boohoo has bought Arcadia brands Dorothy Perkins, Wallis and Burton out of administration in a £25.2m deal that encompasses only the brands’ e-commerce and digital assets and associated intellectual property rights. Moving forward, the brands are expected to become online-only, resulting in a mass closure of stores and thousands of high street job losses.

Columns of note

In The Guardian, Will Hutton argues that the speed with which the UK has vaccinated its vulnerable populations in contrast with vaccine rollout challenges faced by the EU does not justify, nor compensate, for the losses that Britain has had to face as a result of Brexit.  
From Russia and Belarus to Thailand and now, Myanmar, Clara Ferriera Marques highlights in Bloomberg the role that social networks and messaging services have played in keeping anti-government protests alive.

Cartoon source: The New Yorker


The week ahead

The US Senate trial of Donald Trump is set to begin on Tuesday after he was impeached last month in a vote in the House of Representatives. Congressional committees are set to craft legislation this week on specific components of President Joe Biden’s $1.9tn stimulus package.
Across the Atlantic, ECB president Christine Lagarde is set to discuss the bank’s annual report at the European Parliament on Monday.
The UK RICS house price balance will be announced on Thursday. The first print of UK fourth-quarter GDP will be published the day after, with a 0.5% growth forecast. It is expected to reflect the last surges of activity in the lead up to Christmas before implementation of the third lockdown slowed the economy again.
Companies that are set to publish earning reports include AstraZeneca, Ocado, Uber Technologies, Lyft, Disney, Tui, Twitter and Coca-cola, amongst others.
Lunar New Year celebrations, also known as the Spring Festival, are due to begin on Friday.

What’s happening today?

Inland Zdp

Trading announcements

Blue star
Schroder UK Mid & Small Cap Fund

Huatai Secs.

Int. economic announcements
(07:00) Industrial Production (GER)

Source: Financial Times

did you know

When Wal-Mart was attempting to open stores in Germany, they had to withdraw their policy of requiring staff members to smile at customers, because German customers found it weird and off-putting.

Parliamentary highlights

House of Commons

Oral questions
Home Office (including Topical Questions)
The Armed Forces Bill: Second Reading
Motion to approve the Armed Forces Act (Continuation) Order 2021
– Johnny Mercer
Zoos and aquaria during the covid-19 outbreak – Emma Hardy

House of Lords 

Baroness Fraser of Craigmaddie
Oral questions
Report by William Shawcross on compensation for victims of Libyan-sponsored IRA terrorism – Lord Hay of Ballyore
Impact on the East Midlands and Yorkshire of not delivering the eastern leg of HS2 Phase 2B in full – Lord Ravensdale
Impact of conflict in Tigray upon the stability of the Horn of Africa region and the implications for government Overseas Development Assistance policy – Baroness Anelay of St Johns
Health and environmental risks associated with approving genetically modified food production in the UK – The Lord Bishop of St Alba
Support for university students as a result of the pandemic – Lord Parkinson of Whitley Bay
Domestic Abuse Bill – committee stage (day 5) – Baroness Williams of Trafford

Scottish Parliament 

No business scheduled

Share this post