Despite soaring inflation in Europe, hedges appear cheap

Despite seeing major market swings following the 2016 Brexit referendum, we don’t expect Britain’s departure from the European Union (EU) to have any major economic effects in our baseline outlook for 2021 and beyond. Far more important are COVID-19, fiscal policy, and bigger questions around future productivity growth.

The conditions for a relatively quick and robust rebound rest on the success in containing the virus within a reasonable horizon, and a well-calibrated economic policy response.

The Bank of England and the British government both announced easing measures to counter the effects of the coronavirus on the economy – how effective can we expect these measures to be?