Worldwide, the quarantine that has become strangely normal is starting to be relaxed. The economic damage is already immense and while comparisons with 2008/09 are understandable, what is now unfolding will be noticeably worse. At the time of writing, 15% of the U.S. workforce is unemployed and on some definitions, it is noticeably higher. The enemy now is not a recession; it’s a depression. The jump starting of the global economy is a mammoth undertaking and cannot be left too long; if it is, the patient may not be capable of all but long term resuscitation. Then a 21st century Marshall Plan will be required.
In addition, there are one or two other potential issues which, even if a recovery gathers steam, could still result in derailment. The Sino-US trade tensions are still there and perhaps now assume even greater importance, given the origin of Covid-19. There is no doubt Mr Trump will seek to capitalise on it. Within the E.U., there has been noticeable friction with regard to exactly what member states are expected to contribute to the bloc’s rescue plan. The numbers are now so vast that Germany is starting to push back against any collective assumption of debt obligations.
So, many challenges remain. Once a degree of normality returns, there will be an economic bounce but that is inevitable given the crashing fall in output. However, it is what happens subsequently that carries far more importance. We will not attempt to predict the path of macroeconomics. To our minds, it makes more sense to purchase (or retain) enterprises of substance and trust that what made them such will continue. In our experience, good businesses have a knack of finding new ways to do well.