Barclays Research Examines How Life and Markets May Evolve after COVID in the 2021 Equity Gilt Study

Rhea-AI Summary

Barclays Research published the 66th edition of the Equity Gilt Study, addressing post-COVID economic dynamics. The report highlights risks of a disorderly unwinding of stimulus in the US and Europe, with inflation and debt impacting policy credibility. While a controlled unwind is expected, emerging markets like Brazil and Turkey face heightened vulnerability. The report also discusses the impact of mobility restrictions on global travel and real estate trends, projecting a potential 20% drop in office demand while residential markets may thrive.

Positive

• Expectation of an orderly unwinding of stimulus programs.
• Continued demand for residential properties.

Negative

• Potential for inflation spikes and elevated debt loads.
• Emerging markets, particularly Brazil and Turkey, are at risk of credit events.

Barclays Research today released the 66^th edition of the Equity Gilt Study (EGS), a flagship annual publication. Combining market-leading macro analysis with a unique multi-asset dataset spanning over 100 years, this year’s report examines how markets and society may evolve after COVID-19.

In a chapter on monetary and fiscal policy, economists and strategists explore the risks of a disorderly unwinding of the extraordinary stimulus programmes put in place in the US and euro area to counter the effects of the pandemic. Inflation spikes and elevated debt loads could test policy-makers’ credibility as they navigate the trade-offs between supporting growth and preventing economies from overheating. Despite these risks, Barclays’ strategists expect an orderly unwind to be the most likely outcome.

In a chapter on debt sustainability, Barclays strategists consider whether the benign outcomes for the US and Europe can be repeated worldwide. They argue that debt loads eventually matter, but more in some countries than others. They see low-growth, high-rate emerging market economies such as Brazil, Turkey and Peru as especially vulnerable to credit events over the next decade.

Away from debt dynamics, Barclays analysts focus on restrictions on mobility and how the virus and its variants have impaired people’s ability to move across international borders without friction. A state of semi-permanent restrictions such as testing requirements and vaccine passports could lead global mobility to contract, affecting emerging economies disproportionately. Domestic tourism, on the other hand, could benefit.

The report also digs in to the new world of work. As employers and employees shift to more flexible models, Barclays experts weigh the implications for real estate and retail. The report finds that demand for offices could drop by up to 20%, while the residential property market will likely be buoyed for years to come.

Commenting on the launch of this key report, Jeff Meli, Global Head of Research at Barclays said:

“In this year’s Equity Gilt Study, Barclays experts explore how the coronavirus crisis has reshaped the macro landscape, posing new dilemmas for policy-makers in developed and emerging markets, as they balance the need to support growth while keeping inflation in check. We also look at how the pandemic has permanently altered global mobility and office working.”

>>> Clients can gain access to the full Equity Gilt Study report on Barclays Live
>>> To learn more about our Research offering and view recent insights, click here

Notes to editors:

Since 1956 Barclays’ Equity Gilt Study has provided uniquely rich data, analysis and commentary on long-term asset returns in the UK and US. Data for the UK goes back to 1899, while the US data, provided by the Center for Research in Security Prices at the University of Chicago, runs from 1925.

About Barclays:

Barclays is a British universal bank. We are diversified by business, by different types of customers and clients, and by geography. Our businesses include consumer banking and payments operations around the world, as well as a full-service corporate and investment bank.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210525005114/en/

FAQ

What is the focus of the 66th Equity Gilt Study by Barclays?

The study focuses on post-COVID economic dynamics, assessing risks associated with stimulus unwinding and its impacts on global mobility and real estate.

What are the risks highlighted in the Equity Gilt Study by Barclays?

The study highlights risks of disorderly unwinding of stimulus in the US and Europe, inflation spikes, and high debt burdens.

How might office demand change according to Barclays' report?

Barclays projects that demand for offices could decrease by up to 20%.

Which countries did Barclays identify as vulnerable to credit events?

Barclays identified Brazil, Turkey, and Peru as vulnerable due to their economic conditions.

What implications does the report suggest for emerging economies?

Emerging economies may face disproportionate impacts from global mobility restrictions post-COVID.