Covid restrictions dampen sentiment despite Brexit bill approval

The Brexit bill has been approved in Parliament, eradicating fears of a no-deal Brexit. While the AstraZeneca vaccine gives hope of a ramp-up in vaccinations, near-term lockdown measures and an impending exit from the EU is hurting sentiment. 

• UK stocks ease back despite passing of Brexit bill 
• Brexit fears and tightening restrictions dampen sentiment
• AstraZeneca vaccine approval helps improve outlook for 2021 recovery

UK stocks are on the back foot despite the passing of the Brexit Bill, putting to bed fears of a no-deal Brexit when the UK leaves the EU on Thursday night. Unfortunately it appears to be the case of a buy-the-rumour, sell-the-fact scenario. Despite allaying fears of a no-deal scenario, we are instead facing up to the fact that the UK is facing months of economic instability. With the government shifting a further 20 million people into Tier 4 tomorrow, 78% of the country will be operating under restrictions that severely hinder economic activity. With a record 53,000 new cases yesterday, the UK remains on a sharp upward trajectory with no sign of turning the corner. The fear is that without a swift reversal in cases, there is a strong chance that the government either lengthens or tightens restrictions further. 

The outlook for 2021 looks positive given today’s UK approval of the crucial AstraZeneca/Oxford vaccine. With the government having ordered 100 million doses of the cheap and easily stored product, there is a hope we will see a sharp ramp-up in vaccinations in the months ahead. While the vaccine requires two-doses for long-term protection, the ability to substantially shield patients with the first jab allows for a huge initial roll-out in the UK. Much of 2021 will be dominated by a perception of just how swiftly we can remove restrictions and allow businesses to get back to some semblance of normality. The rollout will be heavily influenced by just how quickly the government can obtain the product. With both Pfizer and AstraZeneca products now available for the NHS to administer, we are looking at a dramatic ramp-up in the speed to inoculation throughout the UK.