Economic Review – December 2020

Our monthly economic review is intended to provide background to recent developments in investment markets as well as to give an indication of how some key issues could impact in the future.

Overview

BREXIT TRADE TALKS

Following a gruelling nine-month negotiation process, the UK and EU finally agreed and signed a post-Brexit trade deal just a day before the transition period ended.

ECONOMY ‘UNUSUALLY UNCERTAIN’

Minutes released after the final Monetary Policy Committee (MPC) meeting of last year has revealed the Bank of England’s (BoE) latest views on the state of the UK economy.

MARKETS

As December drew to a close, leading global markets finished the month in positive territory. Year-on-year, a more mixed picture was evident. In the UK, the FTSE 100 ended the year down 14.34%, the index’s worst year since 2008, as soaring virus cases weighed on sentiment. Despite this, in the last trading week of the year, shares closed at their highest since the pandemic prompted a market retreat last March, as investors welcomed the post-Brexit trade deal.

REDUNDANCIES HIT RECORD HIGH

The latest official set of labour market statistics has revealed a further increase in the rate of unemployment, with redundancies rising to record levels.

BINFLATION DROPS SHARPLY

Lower prices for clothing, food and non-alcoholic drinks triggered a surprise fall in the UK’s headline rate of inflation according to the latest official statistics.