HEAD OF MULTI-ASSET
LIONTRUST ASSET MANAGEMENT
Score prediction: ENGLAND 3 – SCOTLAND 0
There are many reasons to be cheerful at the prospects for the UK. One of which is that we have one of the highest saving rates in the developed world, which we anticipate will support a rise in spending now non-essential shops are open.
Some measures show there is £60bn of pent-up cash ready to be let loose, and while we can’t of course predict how, when or whether we may return to previous spending habits, a 9.2% rise in April retail sales suggests shoppers are gearing up for a summer splurge.
This high savings rate could also serve as a cushion through a further downturn. A big consumption boom is not our base case, but we should see some pick up in holidays, for example, once travel restrictions are eased. Additionally, we have a supportive central bank willing to implement further quantitative easing, a government ready to bring in more targeted fiscal stimulus, and potential enhancements to Brexit trade deals although it may be clutching at straws to hope for the latter in 2021.
Our positive view of the UK, however, largely hinges on vaccine success, with the country potentially benefiting more from an efficient rollout as it has been harder hit. We know newsflow around this will continue to be volatile; nevertheless, the UK was early to order and, at the time of writing, more than a key milestone has been reached with 75% of UK adults having had at least one dose of a covid vaccine, less than six months after the rollout started.
HEAD OF CREDIT
Score prediction: ENGLAND 1 – SCOTLAND 2
And so to the oldest football fixture in the world – over 150 years of battles – with the Auld Enemy, England winning 48 to Scotland’s 41 thus far – this game would be big if it was a friendly, but this is the Euro finals!
The battles have been less common since the annual match was disbanded in the late 1970s. Looking back, it seems ‘peak auld enemy’ coincided with peak inflation. UK Gilts that yielded 10% were not uncommon back then, whilst sub 1% has been the more recent norm.
In recent months however, UK inflation has more than doubled on the back of higher petrol prices and gas and electricity bills. Investor appetite for alternative assets such as crypto currency and gold has grown, with some sighting the limited supply of such assets as key to protecting their purchasing power in a regime of higher inflation. And so, anticipation levels are rising for both inflation and this fixture once again.
Scotland has something of a unique offering when it comes to storing value – rare whisky. Indeed, in the past year, rare whisky values have increased by 40%, outperforming luxury assets including watches, art and vintage cars, according to The Luxury Investment Index 2020 by Knight Frank.
Industry experts point to the fact that whisky is bought for both collection and to be consumed. The constant decline in the already finite supply of rare whisky provides a natural store of value to its pricing. This is something to be savoured in a world of fiat currency expansion.
There is estimated to be nearly four casks of whisky to every person in Scotland, a ratio that will reduce should Scotland pull off an unlikely victory at Wembley.