Coronavirus  

We can still be optimistic about the future

Simon Read

Simon Read

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.

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”.