23rd November 2020
More tunnel before the light
The November rally in stock markets finally petered out last week as it felt as if ‘November finally got the
memo about 2020’. This was despite further positive vaccine news that bolstered optimism for next year.
Last Monday, US firm Moderna announced that phase 3 test results of its messenger RNA based vaccine
had a 95% success rate, confirming that messenger vaccines work, after the Pfizer & BioNTech messenger
vaccine – had also produced above 90% effectiveness a week earlier. The latter, two-shot vaccine, could
start being given to the UK’s vulnerable people before the end of this month, with the second dose being
administered three weeks later. The early recipients may achieve the prospect of a proper Christmas with
their families – updated rules permitting. Meanwhile the one-shot vaccine from Oxford/AstraZeneca is
likely to begin distribution just after Christmas. By March, a million people a week could be receiving
immunisation in the UK.
New Asian trading bloc gets global respect
Bigger is better in trading blocs. And last Sunday, 15 East Asian countries signed an historic accord to form
the world’s largest trading bloc, containing a third of the world’s population and accounting for around 30%
of global GDP. The Regional Comprehensive Economic Partnership (RCEP) is bringing together the ten
ASEAN members with their Northern and Southern neighbours in Asia-Pacific: China, Japan, South Korea,
Australia and New Zealand. RCEP nations have now committed to lower tariffs progressively, counter
protectionism, boost investment across borders and allow freer movement of goods within the region.
EU’s populist nations threaten to shoot themselves in the foot
For Europe, 2020 was supposed to be a fiscal awakening, with the pandemic putting paid to the issues that
created the first Euro crisis; the Union’s lack of fiscal integration, its inflexibility on budget rules and inability
to handle payment crises. The crisis affected the whole continent, threatening to burden health services
and leave swathes of the population in financial ruin, unless governments spent their way to the other side.
After extensive negotiations, a continent-wide €1.8tn spending package was agreed in the summer. EU
negotiators struck a hard-fought deal with the European Parliament to create the EU recovery fund,
together with the union’s seven-year budget, was designed not just to plug the gap between now and
normality, but to invest in a brighter, more sustainable and digital future afterwards.