For the first time since the pandemic struck a year ago UK markets are optimistic about the country’s future economic prospects.
The RSM Financial Conditions Index, based on an aggregated performance indicator of currency, bond and equity markets, has improved from -0.1 below normal stress levels in Q3 2020 to a current positive reading of 0.3.
All this means RSM now believes conditions are right for longer-term growth of the UK economy. Simon Hart, lead international partner at RSM UK, explained: “The extension of business support, including the furlough scheme and the eligibility of 600,000 self employed individuals that previously were not qualified to receive Covid-related support, including those that become self-employed after the 2019-2020 tax year, will prevent some long-term economic scarring in the jobs market caused by the pandemic.
“The introduction of the infrastructure bank, eight UK Freeports and a focus on the green agenda will unlock growth potential in key regions and bolster UK trade and investment.”
RSM chief economist Joe Brusuelas added: “However, spending plans in this week’s Budget reinforces the need for the Bank of England to keep a lid on long-term interest rates. There are unavoidable pandemic expenses ahead; and a need for direct support for businesses and individuals and investment in advanced industries will allow the economy to compete in the global supply chain.”