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The Cambridge Weekly – 16th March 2020

Published

16th March 2020

Categories

General News

Notes on a crash: the short, medium and long term

Last week will remain in the memories of the investment community for a very long time. Because of the
extremely rapid fall from the all-time high that global markets had reached on 19 February, this stock
market crash is right up there with 2008, 1987 and yes 1929. However, this is where any obvious similarities
end. Compared to those historical precedents, this one has been caused by an external – and widely
expected to be temporary – shock to global economic activity levels.

 

UK – Bank and Budget

The British economy, like those all over the world, will take a substantial hit from the COVID-19 pandemic.
As the Prime Minister said in his Thursday broadcast, the question is how severe and lengthy the downturn
will be.

The responses from policymakers will be crucial. A technical recession (defined as two consecutive quarters
of null or negative growth) is almost inevitable. For the UK to avoid an even longer period of contraction
will still need significant, swift, and measured responses from policymakers. It will probably also need some
good luck. The one bit of good news to come out this week is that the UK can at least count on the former.

 

Read the full commentary here