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Britain should prepare for recessions and a no-deal Brexit

A senior investment analyst for one of the UK’s leading actuarial and pension consulting firms has warned that the country should expect recessions over the coming months and the economic backdrop to remain uncertain heading into 2021, following the biggest ever fall in UK GDP and that, as the Brexit transition period draws to an end, a no deal is a serious possibility.

Stefano Carnevale addressed over 100 pension and investment specialists at Quantum Advisory’s first ever virtual “Pensions for Brunch” seminar. The comments were part of Stefano’s opening investment update covering market performance over the last 12 months, and the outlook for pension schemes and investment strategies during these volatile times.

Stefano said: “We were actually in a good place at the start of 2020; Brexit was progressing and equity markets were performing well. It was not until March, when large-scale shutdowns became inevitable and the effect on businesses was unclear, that panic set in. The market falls we experienced were unprecedented in terms of speed and gilt yields and corporate bond spreads experienced volatility as investors sought liquidity. UK GDP fell 20.4% in April following the first full month of lock-down, which was consistent with other European countries and the US. More recently, global equity markets have improved somewhat. Governments around the world along with central banks have played an important role by implementing large scale fiscal and monetary responses. Subsequently returns over a one-year period, to the end of May, are positive c6%.

The path to recovery is uncertain at present, and with the US elections and Brexit coming up, it’s looking even more unclear. The big question with Brexit, is can we secure a free trade agreement in the tight timeframe we have remaining? If not, investors should not rule out a no deal scenario?”

Following Stefano, Osborne Clarke’s Partner, Claire Rankin, and Senior Associate, Alicia Cain, gave an insight into Defined Benefit and Defined Contribution governance in UK pension arrangements. The duo from the international legal practice looked into reasons why it has been cranked up over the previous few years, the implications on pension schemes and what further governance is on the horizon.

Simon Hubbard, Senior Consultant and Actuary at Quantum Advisory wrapped the webinar up with an overview of life expectancy and the implications the increase slowdown might have on pensions.

The “Pensions for Brunch” webinar was part of the long-running “Pensions for Breakfast” seminars that Quantum Advisory usually holds at the Celtic Manor. The webinar is available to watch here.