• Marcus Brookes
  • 20 March 2020
  • 5 mins reading time

There is a great deal happening at the moment. So I thought I’d prepare a quick note to update you on what is going on in the world of investments and finance as a result of and in response to the spread of the coronavirus COVID-19.

As the virus takes an ever greater toll on human life, the response from governments and financial policymakers is becoming more substantial and more co-ordinated.

In the UK alone, we’ve seen both the government and the Bank of England deliver an initial response, quickly followed by more substantial measures. The Bank of England’s new governor, Andrew Bailey, announced a reduction in interest rates yesterday, 19 March, day four of his tenure as governor. This brings a key UK interest rate down from 0.25% to 0.10%, a record low, and follows a larger reduction just one week earlier.

The Bank of England is also going to inject more new cash into the financial system by buying an additional £200 billion of UK bonds. The purpose of these measures is to make borrowing as cheap as possible while also ensuring that banks and other lenders have access to plenty of money that can be lent to customers.

At the same time, Chancellor of the Exchequer, Rishi Sunak, has stepped up financial support being provided by the government. Mr. Sunak, who has been in situ for a month, has pledged a total of £330 billion in grants, loans and tax holidays.

These measures can help to offset some of the financial pain that businesses and individuals are feeling as increasingly stringent measures are being taken to slow the contagion of the virus.

Aside from the personal tragedy that the virus brings its direct victims, households are being hit by job lay-offs or indefinite periods of unpaid leave while the siege mentality takes hold.

Meanwhile, even Brexit is taking a back seat. The European Union’s Chief Negotiator, Michel Barnier, has tested positive for the virus himself, so we might see both sides agree to delay the negotiation talks and subsequent transition period.

Under the circumstances, I think this would be a wise move as there is so much resting on the long-term future of all involved.

For now, though, it’s a case of taking care of the people closest to us, and reaching out to those a little further afield. With this in mind, we fully support all measurements advocated by the government, and by both of the organisations that created Schroders Personal Wealth: Lloyds Bank plc and Schroders plc.

Both companies have contacted clients to offer what support they can, and we are very much part of those efforts.

I will write further notes to keep you posted on relevant news. For now, may I take this opportunity to wish you and your loved ones good health.

Forecasts of future performance are not a reliable guide to actual results in the future; neither is past performance a reliable indicator of future results. The value of investments, and the income from them, may fall as well as rise and cannot be guaranteed and the investor might not get back their initial investment.

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