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.  Although the UK officially left the EU
on 31 January 2020, trade had continued on the same basis during the 11-month transition period. The two entities moved to new arrangements at 23:00 GMT on 31 December when the UK formally severed its ties with the EU.
Negotiations surrounding the ‘EU-UK Trade and Co-operation Agreement’ were concluded on Christmas Eve and
the 27 EU member states gave written approval for the agreement on 29 December. The following day MPs
overwhelmingly approved the deal in a parliamentary vote, with the bill backed by a Commons majority of 521 to 73.
That paved the way for European Commission President Ursula von der Leyen to sign the treaty in Brussels on
the morning of 30 December and, later  that day, the treaty was flown to the UK for Prime Minister Boris Johnson to sign in Downing Street. Business groups expressed widespread relief that a deal, which preserves tariff and quota-free EU-UK trade for goods and components worth around £660bn, had ultimately been agreed. However, they also urged the government to provide quick and clear guidance to ensure  trade and services can keep flowing.
Commenting on the deal, CBI Director General Tony Danker said, “This will come as a huge relief to British business.
But coming so late in the day it is vital that both sides take instant steps to keep trade moving and services flowing
while firms adjust. Immediate guidance from government is required across all sectors.” The government has acknowledged the new relationship will involve ‘practical and procedural changes’ and warned of ‘bumpy moments’ for UK businesses as they get to grips with the new trading SFFS Economic Review_Dec 20rules.

Spending Review:

Chancellor Rishi Sunak has announced government spending plans for the coming 12 months as part of his
Spending Review, delivered to the House of Commons on 25 November.
During his statement, Mr Sunak said the government had already spent £280bn supporting the economy
through the pandemic and pledged a further £55bn over the coming year as part of a series of measures designed
to aid economic recovery. As a result, government borrowing is set to rise to a peacetime high.
Estimates produced by the government’s independent forecaster, the Office for Budget Responsibility (OBR),
suggest the new measures will push borrowing up to £394bn in the current fiscal year, £22bn more than predicted
in August. OBR forecasts also imply borrowing will stay above £100bn per annum for the next five years and
warn tax rises or spending cuts will be required to stabilise the burgeoning debt. OBR Chairman, Richard Hughes, said, “The Chancellor will need to find £20bn to £30bn in spending cuts or tax rises if he wants to balance revenues and day t0 day spending, and stop debt rising by the end of this parliament.” Among other announcements, the
Chancellor said around 1.3 million public sector workers will have their pay frozen next year arguing he could not justify a rise when many private sector employees have seen pay and hours cut during the crisis. He did, though, confirm that some NHS staff and lower-paid workers will be excluded from the freeze. Mr Sunak also announced that the National Living Wage will rise by 19p per hour to £8.91, with the rate extended to cover those aged 23 and over. In addition, the Chancellor confirmed the government is suspending its commitment to spend 0.7% of national income on overseas aid; the new ‘temporary’ 0.5% target will yield savings of around £4bn.SFFS Economic Review_Nov 20

Chancellor Rishi Sunak has set out a series of revamped measures designed to halt job losses and stem
business failures as part of his Winter Economy Plan. Mr Sunak’s statement, delivered in the House of Commons on 24 September, was a last-minute replacement for the planned Autumn Budget which the Treasury had cancelled the previous day. That decision was taken in order to focus efforts on dealing with the short-term economic problems caused by the tightening of coronavirus restrictions. The centrepiece of the Winter Economy Plan was a new scheme to replace furlough, which will run from 1 November. The Job Support Scheme will last for six months and see government subsidise the pay of employees who work at least a third of their normal hours. Under the scheme, employers will pay employees for hours they actually work, with government and the employer each covering a third of the hours staff can’t work. Other announcements included a continuation of the self-employed grant on similar terms to the Job Support Scheme and an extension of the emergency VAT cut for tourism and hospitality until the end of March. In addition, the deadline on coronavirus loan schemes was extended and amended terms
introduced for existing borrowers, while businesses were given more time and flexibility to pay deferred tax bills.
During his statement, the Chancellor stressed that the government’s economic response to the pandemic
was evolving and that his aim now was to cushion a painful adjustment to a new way of living and working. He did
though make it perfectly clear that his emphasis has firmly shifted to protecting “viable” jobs. Despite cancelling the Autumn Budget, the Treasury has confirmed that it still plans to press ahead with a comprehensive spending review that is also scheduled to take place this autumn.  SFFS Economic Review_Sep 20

Although recent data has confirmed that the UK economy is recovering from its coronavirus lockdown slump, the
longer-term outlook (unsurprisingly) remains decidedly unclear. Official data released by the Office for
National Statistics (ONS) showed that the UK economy grew by 1.8% in May, following April’s record 20.3% contraction. While this modest rebound was lower than all forecasts submitted in a Reuters poll of economists, it did at least confirm a recovery is underway. Furthermore, data covering a more recent time period points to a marked
improvement in economic activity across the private sector as lockdown measures have eased. Indeed, the IHS
Markit/CIPS Flash Composite Purchasing Managers’ Index, where any value above 50 represents growth, stood at 57.1 in July. This was a noticeable rise from 47.7 in June and significantly higher than April’s survey-record low of 13.8. Bank of England (BoE) Governor Andrew Bailey also confirmed that he believes the economy has started to
recover. Commenting on UK economic prospects during a webinar organised by the BoE, the governor said: “We are
seeing activity return. We are beginning to see this recovery.” However, Mr Bailey also stressed that the strength of recovery will depend upon how cautious people are about returning to normal life and the risks posed by a potential second wave or localised COVID-19 outbreaks. He also added that it remains unclear how much long-term damage will be inflicted on the economy by companies failing. The Governor’s comments vividly demonstrate the high degree of uncertainty surrounding any assessment of the economic outlook, which has inevitably resulted in a wide range of views emerging. The median forecast, though, in a poll of over 70 economists, conducted by Reuters between 13-21 July, suggests the UK economy will contract by around 9% this year before expanding by 6% in 2021….SFFS Economic Review_July 20

Our 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.
It is not intended that individual investment decisions should be taken based on this information; we are
always ready to discuss your individual requirements. We hope you will find this review to be of interest.

Major benchmarks closed the month in positive
territory, as some economic data boosted sentiment
towards the end of the month. A record jump in US
housing sales and a fourth straight month of growth
in Chinese manufacturing, served to offset some
concerns over COVID-19 infection rates.
• In the UK, the FTSE 100 gained 1.53% in June, to
6,169.74, the domestically focused FTSE 250 rose
0.45% in the month to close on 17,119.16. The Junior
AIM index closed on 883.75, a monthly gain of 0.96%.
The blue chip index closed Q2 up 8.78%, its biggest
quarterly gain since 2010, as a host of global stimulus
and an uptick in business activity as lockdown
measures ease, strengthened optimism about a postpandemic
economic recovery. Concerns do exist, as
local lockdown measures were imposed on Leicester
due to virus flare-ups in the city.
• On European markets, the Euro Stoxx gained 1.88%. In the US, the Dow Jones advanced
1.69% in the month to 25,812.88, while the tech
orientated NASDAQ returned 5.99% to finish June on
10,058.77. The Dow jumped over 17%, and the NASDAQ
over 30% in Q2, marking these indices’ best overall
quarters since 1987 and 2001, respectively.
• On the foreign exchanges, sterling closed the
month at $1.23 against the US dollar. The euro
closed at €1.10 against sterling and at $1.12 against
the US dollar.
• Gold is currently trading at around $1,783 a troy
ounce, a gain of 3.09% on the month. Investors are
keeping the precious metal in bullish territory despite
a surge in risk appetite. Brent Crude is currently
trading at around $41 per barrel, a gain of around 15%
on the month. A recent poll, highlights expectations
of a modest recovery in oil demand in Q3 and a
stronger rebound towards the end of the year and
into next, as oil demand is expected to pick up.  SFFS Economic Review_June 20 (003)