What impact will the furlough scheme have on UK equity investors?

clock • 2 min read

A steep contraction in the UK economy is all but inevitable. Indeed, the latest survey data points to a sharp drop in activity since the start of the Covid-19 crisis.

Thankfully, UK policymakers have acted fast, and at scale. The Government's Coronavirus Job Retention Scheme is unprecedented, but such drastic action comes at a price. This is perhaps especially problematic for a nation which has long struggled with twin deficits (both fiscal and trade). The scheme is also fraught with moral hazard; given a government backstop, companies could take undue risks, and so-called 'zombie' businesses could be kept alive well beyond their natural endpoint. Why the UK 'could be set for particular attention' when investors return to equities Nevertheles...

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