CoronavirusDec 2 2020

We can still be optimistic about the future

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Life comes at you quickly, doesn’t it? Particularly in the past 12 months or so. Waves of bad news have left most of the country reeling, and we still have the feeling that it is only going to get worse.

Sadly, it does look like things are going to get worse for millions in the coming months.

Not just because of the coronavirus pandemic, but also because of the economic effects of Brexit.

Investors have watched with worry during 2020 as some nest eggs have dramatically shrunk and then slowly recovered.

It’s not the best measure, but the FTSE 100’s journey during the year has been interesting, if not downright alarming.

Investors have watched with worry during 2020 as some nest eggs have dramatically shrunk and then slowly recovered

In January, I am sure you remember, it nudged close to a record high, soaring to almost 7,700.

Within two months – and after a few days of market pandemic panic – it had slumped below 5,000, its lowest point for a decade.

When bargain hunters moved to snap up some cheap shares, the FTSE leapt back to almost 6,000 in just a few days, the level at which it has been bouncing around ever since.

That was an interesting time, wasn’t it? I was looking after the business section of a national tabloid and the stock market news made the front page for several days.

What do you think people outside financial services make of such market turmoil?

Let’s face it, it is really hard to ignore the market when it is front-page news for days on end.

But I hope that no one panicked and made foolish financial moves in those confusing March days.

Can we now look ahead to a more positive outlook?

Eventually, reckons Brian Dennehy, managing director of Dennehy Weller & Co. He says there is “pent-up optimism, and a lot of money not invested”.

He predicts there could be a 50 per cent rise in the FTSE 100 in the future.

But he hedges his bets by adding: “I am not suggesting any time period for this – if it occurred over two to three years it would not be unusual.”

Of course, that is crystal-ball gazing, but it will be interesting to see whether he is proved correct.

Actually, let me re-phrase that: it will be pleasing if he is proved correct, not least for the millions of investors with their pensions and savings tied up in stock market-linked funds.

Now, let’s consider the plight of people who have lost their jobs this year.

The latest official figures show that 1.62m people are now unemployed, a number which has jumped by more than 300,000 since last year.

Alarmingly, in his November Spending Review, the chancellor warned that unemployment will top 7.5 per cent next spring, leaving some 2.6m Britons out of work.

That is an army of people with no real income and, quite probably, no real immediate prospects.

Rishi Sunak said the economy was predicted to contract by 11.3 per cent in 2020, which was “the largest fall in output for more than 300 years”.

He added that the “economic emergency” caused by Covid-19 had “only just begun”.

That suggests it is quite possible his estimate is on the low side and the number of unemployed could rise to close to 3m.

The last time the figure was consistently at that level was back in the mid 80s – from 1983 to 1987, at the height of Margaret Thatcher’s battle with the unions.

I am not normally one to bandy figures around like this, but they really are a remarkable set of numbers.

The fact that we seem to have accepted them with a collective British shrug is hardly surprising given the past few months.

But when everyone has been handed a dose of a Covid vaccine and the rule of six has been scrapped to allow us to meet up with long-missed pals to party properly, the financial hangover will long outlive the post-party morning head.

Collectively we will shuffle slowly back into the post-pandemic world, many keen to spend their lockdown savings on luxury holidays.

But there are likely to be many more looking for jobs.

Again, I feel the need to look forward to the future with some optimism.

Yes, we have lost lost of businesses because of the challenges of Covid-19 and, yes, there are plenty of uncertainties ahead.

But I am hoping a new dawn of financial optimism will emerge after the toxic 2020 dust has settled, and not just because we will have a potentially more reasonable US President at the helm.

What will be important – and I can not stress this enough – is the need for calm heads when it comes to money.

While people’s long-term financial plans may have appeared to have taken a massive blow this year, keeping calm and making new sensible decisions about money are the order of the day.

I am trying to encourage everyone to be positive as we head into 2021 and I would like you to do the same.

After all, next year can not be as bad as 2020, can it?

Simon Read is a freelance journalist