Join our community of smart investors

Today's Markets: UK economy bounces back, inflation incoming, vaccine pledge & more

Follow our Markets Live blog for the latest news that affects your portfolio
June 11, 2021

Good morning and welcome to the IC's Markets Live blog with all the latest markets news which affects your portfolio. 

UK economy bounces back hard

Is the UK set to emulate the US with a rapid return to pre-pandemic levels of economic activity. The latest GDP figures suggest that this just might be on the cards. A hard bounce back in economic activity in April, boosted by an easing of lockdown letting shoppers loose on the streets and the post Easter return of full attendance at schools freeing up beleaguered parents to return to work more productively, saw levels of activity on a par with last summer when the UK was released from lockdown 1.0. 

But hopes of building back a more diverse economy were knocked by the return to a familiar story of service sector growth making up more more prosaic activity elsewhere. The service sector expanded by 3.4 per cent while production and construction both saw modest dips in activity. Overall GDP in April was 3.7 per cent below pre-pandemic levels - the smallest gap yet seen. With May bringing the resumption of indoor hospitality and June potentially seeing more restrictions lifted, economists are expecting further growth to come - the Bank of England expects GDP to expand by 4.2 per cent in the second quarter as a whole. 

Inflation incoming? 

But the rapid resumption of economic activity has also brought with it fears of a return of inflation. Expectations were fuelled yesterday by whopping inflation figures from the US which saw consumer prices rise at their fastest level since 2008 in May with the consumer price index 5 per cent higher than a year previously. 

But the Federal Reserve is retaining its relaxed stance to inflation, for now at least. Expectations are that inflation will run ahead of previous targets for most of this year and into 2022 but the Fed are prepared to wear this if it means a rapid recovery from the hammer blow of Covid. 

With inflation also expected to kick in across this side of the pond in the coming months investors should be braced for the effect on their portfolios - after all inflation has not really been a factor for investors for more than a decade now. In our cover feature this week Chris Dillow looks at how investors can prepare themselves while Alex Hamer looks at the inflationary spiral being seen in basic materials. Read more here

1bn vaccines pledged by G7

Cornwall at this time of year is normally associated with cream teas and scrumpy cider but the locals and holiday makers in Carbis Bay have had their peace rudely interrupted by the arrival of the G7 leaders and all the attendant security required by this jamboree. 

Amidst the chat about rebuilding the global economy, the G7 are also expected to jack up their ‘vaccine diplomacy’ with a pledge of 1bn doses of covid-19 vaccines expected to be formalised later today in a bid to help the world’s poorer countries speed up their vaccination programmes and also to head off rival moves by China and Russia to curry favour by agreeing vaccine deals across the developing world. The UK will likely contribute up to 100m doses over the next 12 months with the US planning to donate up to 500m doses by the end of the first half of 2022. 

Read more: 

Pfizer: patent woes could mask a buying opportunity

Pressure growing at GSK

Big pharma: patent battles ahead

Read our live blog below to catch up with the rest of today’s top stories and find out what they mean for your money.