The Economy Code Name Jigsaw


Mervyn King once said, “the lesson is that no amount of sophisticated statistical analysis is a match for the historical experience that ‘stuff happens’.” 

Stuff does happen and always will, if we let ourselves be put back in life because of the challenges we face then the question could be what’s the point of living?

Many of us have responded to the Covid-19 pandemic responsibly and it is becoming clear that if we all stay on the current path, we will beat this, but the fight is not over. It will take time, but things will work out.

We have digested a variety of information and revised our business plan as best we can. As we have learnt in business you must listen, learn and be flexible.

If we were property agents, we would say real estate is a safe haven and tell investors there is no better place to put your money. This may be true in many regards. Bond yields and interest rates have fallen, making real estate attractive which will lead to investment managers considering increasing sector exposure.

Our prediction for the next 10 years give or take is as follows:

  • Pessimism 3 Years – we will drop into a poor economic position and plateau. Some rise but we will fall and stay down for a while.
  • Scepticism 2 Years – we will rise and fall buts things will go fairly well.
  • Optimism 3 Years – time to say I knew it would all be ok and push on.
  • Euphoria 2 to 3 Years – I am a genius, aren’t I? This will last forever, won’t it?  

We refer to the economy as code name “jigsaw” when it comes under pressure it goes to pieces. Covid-19 applied the final pressure and we have crumbled, businesses have gone under and more will follow, costing people jobs, savings and more. 

Is economics a puzzle or a mystery? Or is it a guessing game. 

At present no one has any certainty about the economy nor if we are honest with ourselves to have one in truth. All that can be done is the best by all of us as we have no idea how long this current pandemic will last, how far down it will take us, and the losses be it financial or human.

In the property world, clients still own or occupy a property and they cannot afford to do anything. Vantage is here to support our chosen client base and show the added value we can offer.

Investors are likely to wait and see how the markets develop in the coming months, and it is likely transactions will take longer to complete. After 2009 a two-year period of low transaction volumes was clear, and we are banking on the same. Despite the optimism, we are hearing from some, history shows a clear pattern.

A “V” at best or “W” type cycle looks likely not the “U” we experienced after 2009. The economy we will plateau for a few years, but we will rise, and any bounce back could likely be 2 to 3 years away due to lack of prime product.

Ups and downs will happen, with the retail / leisure sector hit the hardest. New entrants will bolster the market filling voids left by the companies such as Debenhams and Carphone Warehouse as they enter administration, as the likes of Card Factory so astutely did after 2009.

As Steve Jobs said, “you cannot connect the dots looking forward, you can only connect them looking backwards”. As Apple did so well under his tenure Vantage will innovate and adapt during this coming period so we best represent our clients and staff. 

We hope our pessimistic attitude is proven wrong, but history cannot be ignored. Economic cycles and losses are as certain as death and taxes.

Once the current dark cloud clears we look forward to the coming years and seeing us return to a positive economic position. Stay alert everyone, protect your relationships with those you rely on and be patient things will improve!