As experts in risk and the changing nature of risk, Sionic has today issued a new briefing paper to conclude our three part series on “Coronavirus: impact on markets and business”.
While the response to pandemic transitions to a new phase in many locations, the global situation remains complex and dynamic.
Coronavirus COVID-19 has had a huge impact on people, markets and business, affecting their health, their lifestyles and their finances.
COVID-19 has also been – and will continue to be – a massive shock at a macro-level, affecting the economy of states and regions (including the EU) and placing considerable stress on the global economy and markets worldwide, as well as on international political relationships.
To date, governments, international organisations and central banks have all focused their emergency interventions on the rescue phase: providing immediate support to individuals and companies (which ultimately means workers) in need of some form of help to survive.
Now, it is time start making the complex move from rescue to recovery.
- Part A of this new briefing paper reviews the “extraordinary toolkit” used to prevent a complete collapse of the world economy.
- Part B explores the immediate financial impacts triggered by the unprecedented level of intervention, namely massive public and budget deficits, and looks at the effects of the pandemic on employment in creating a negative base for future Treasury revenues.
- Part C then delves into longer-term consequences including:
– inflation of central bank balance sheets through Quantitative Easing;
– the negative outlook for banks’ capital due to non-performing loans and defaulting borrowers or a reduction in fees for services; and
– the impact on markets.
The briefing also looks at risks to the EU and its CMU (Capital Markets Union) objectives, before considering some societal changes and the effects that the crisis is having, or is exacerbating, on international trade and political relationships.
It concludes with a call for the road to recovery to focus on stimulating growth through an environmental, social and governmental (ESG) compliant framework aligned to the Paris Agreement and the Taskforce for Climate Related Financial Disclosures (TCFD) Principles.
Download our third and final briefing paper in this series:
Read our earlier briefing papers: