7 July 2021

What price freedom?

The first six months of 2021 seems to have positively flown by and here we are in the second half of the year.

Already the days are becoming shorter and, with the summer holidays just around the corner, we are looking forward to being free of many of the pandemic restrictions that have so curtailed our lives for well over a year. If all goes according to plan, we will soon be given the freedom to make our own decisions on how best to combat Covid, while other measures are also due to be relaxed. The hospitality sector will doubtless be breathing a hefty sigh of relief.

The government is endeavouring to manage a difficult balancing act. On the one hand, our economy badly needs the boost that ending many of the measures that were introduced over a year ago will bring. On the other, the infection rate is rising rapidly and, while the vaccination rollout has undoubtedly helped limit the effect this will have on hospitalisations and deaths, it has not eliminated it altogether. But the mantra has changed. Learning to live with coronavirus is now the main message.

With the Office for Budget Responsibility warning that the public finances are in a critical condition, revitalising the economy has clearly climbed up the priority list. You can sense the government’s dilemma. The price for not encouraging the economy to open more fully will be increased public debt and even higher taxes than those we are being warned to expect. The price for doing so could be rising hospitalisation and death rates. Talk about a rock and a hard place.

Meanwhile, the weeks ahead will be full of economic data and company results as businesses report on their experience during the first six months of the year, but it is too early for anything meaningful to emerge. American markets were closed for Independence Day, but major indices there made new highs just ahead of the holiday. The trigger was strong jobs data, which suggests the worst of their economic problems are now behind them. But the cost of keeping this juggernaut on an even keel has been massive. Everything has its price.

Back home, the bidding war for Morrisons is hotting up, with another US investment firm expressing interest, despite the board recommending a second, higher offer of £6.3 billion from the American owners of Majestic Wine.  This second bid trumped the first offer, but if the New York private equity giant, Apollo, enters the fray, we could yet see the price rise further. This means that three investment firms have been casting their eye over Britain’s fourth biggest supermarket group. It really does make you think.

Despite this bidding activity, our own stock market has been comparatively subdued, with shares moving in a relatively tight trading range. The possibility of rising inflation continues to attract speculation, but central banks on both sides of the Atlantic have been playing down the risks. Probably the best advice for investors is to stay calm, hope for better weather to accompany the greater freedom that the ending of lockdown should bring and trust that whatever price we end up paying is worth it. 


Conceptually we have a reasonable understanding of inflation. As an economic term, inflation represents the general price rise of goods and services over a predetermined time.

Bespoke Discretionary Portfolio Management

Discretionary Portfolio Management

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