- “Social spending could become the new defence spending”
LONDON – Avonhurst’s Head of World Political Technique, Tina Fordham has outlined a number of the causes COVID-19 is such a singular risk to current social and political methods – and the way we will anticipate to see its affect play out within the quick and long-term future at house and overseas.
Fordham, who was Citibank’s Chief World Political Analyst and has over 20 years’ expertise advising institutional traders, company boards and worldwide organisations about international political developments and their implications for markets and the funding surroundings, has not too long ago been seen commenting on the political and financial fallout from the disaster on Bloomberg TV and CNBC.
“Without meaningful economic solidarity measures, the EU’s days are numbered”
An extension of the Brexit transition interval remains to be extremely seemingly, believes Fordham: “There is very little political oxygen to negotiate a new trade deal in the jaws of the pandemic crisis. But the European Union itself has again been tested. Italy has been among the worst-hit and has been stung by the weak response from Brussels. Without some form of meaningful economic solidarity, the EU’s days are numbered.”
For US elections, each the end result and the method are extra fluid. Explains Fordham: “Most investors expected a second Trump term based on the outperformance of the US economy and financial markets. The pandemic has reversed those achievements, though at the same time, the impossibility of campaigning has deprived his putative competitor, former Vice President Joe Biden, of a platform. So the case for a Trump second term is weaker, but without momentum and mass mobilisation of Democrats, the case for a Biden victory is not compelling either. The machinery of voting is also in question if there is any form of lockdown in place in November. We simply don’t have another historical parallel to compare this with.”
Fordham is awake to the truth that we’re solely seeing the primary wave of the disaster: “Second and third wave effects have yet to be unleashed. The crisis is likely to hit emerging market economies especially hard. A further risk factor is rogue states or actors who look to exploit the distraction of world leaders to make a power or territorial grab.”
“Social spending could become the new defence spending”
Fordham believes that the disaster will change how the social security web is considered: “Discussions of a universal basic income will gain prominence as the reality of rolling lockdowns and large numbers of people prevented from working on a regular basis sets in. Of course, measures to strengthen the social safety net come at a cost, but social spending could become new defence spending. After all, if we’re willing to allocate significant resources to fight against conventional enemies, the public may insist that we be as prepared against an invisible foe. We are already seeing companies take steps to increase social protections for their workforces, and government threats to withhold support from companies paying dividends and engaging in buybacks. This could lead to a boost for the “S” in ESG investing.”
“The COVID-19 crisis will be transformational, dramatically accelerating the shape of the 21st century.”
Says Fordham: “Previous crises were painful, but a pandemic is different; the “fear factor” tends to be way more visceral and long-lasting. The coverage response suite is extra complicated: you may’t ship within the troops, nor can central financial institution motion alone repair the issue. Responding to the COVID-19 disaster and being ready for future pandemics will transfer to the forefront of coverage making. It’s not a matter of getting by means of the following few weeks—will probably be 18-24 months earlier than we’re by means of this, and as soon as we’re, we’ll be coming into uncharted territory.
“The future of the US-China relationship, the most important relationship in the world – tensions will flare up again in the second half. I don’t agree with the view that China emerges from the pandemic as more powerful on the world stage – COVID-19 could be a much more significant catalyst for a ‘Jasmine Revolution’ than an economic crisis.”
“Populists have little to offer now, but we risk a resurgence amid the economic dislocation that will follow.”
Continues Fordham: “It’s striking to see the boost in approval ratings for leaders across the board, but this is a common response to a collective crisis, unifying the country under trying conditions. The leaders that survive will be the ones who are good at communicating and maintaining the trust of their people. In some cases, the beneficiaries of public trust will surprise us, and new leaders will gain prominence.
“After the worst of the crisis has passed, populist leaders will attempt to capitalise upon the dislocation and return to their playbook of pitting groups against one another and playing upon public fears. This risk of a return to populism, and potentially in a more radical form, makes the pressure for a sufficient, bottom-up policy response all the more crucial. Without it, the next election cycle will see a return to the toxic politics of division, which would limit prospects for the recovery.”
“The new wave of political leaders could have frontline experience in fighting healthcare battles, as 20th century leaders had military experience”
Says Fordham: “The next wave of political leaders could come to power because they have competence in crisis-fighting and managing complex systems. In the 20th century, marked by two world wars, leaders with military experience were sought after; in the 21st century having “frontline” expertise might imply healthcare. This might result in a brand new wave of political management, with main implications for social spending and stakeholder capitalism.”
“Globalisation is like gravity – an incontrovertible fact”
“Globalisation has been slowing for some time; US-China trade tensions, sanctions and tariffs have all done their part to bring this about. The US-China relationship is the most important relationship in the world. We had been on track in 2020 for a trade deal and an easing of tensions, but the pandemic and questions over China’s role in combatting it have complicated the picture and US-China tensions are likely to flare up again. But, whilst the rate of globalisation and integration may ebb and flow, globalisation can’t go into complete reverse either. It is, like gravity, simply an incontrovertible fact.
Shortages of medical equipment and PPE have exposed the degree of dependence on foreign suppliers as well as an insufficient supply. This will have to change going forward. The risk is that the crisis becomes a pretext to limit trade in non-essential goods too. Manufacturers will be grappling with the likelihood of at least 18 months of periodic full or partial quarantines, and this will force a rethink. Returning production nearer to consumer markets will clearly become more appealing in the new normal, and this will in turn lead to higher wages and other production costs.”
“Sometimes investors forget that the primary responsibility of the state is human security, not economic opportunity.”
The disaster has introduced traditionally distinctive challenges, believes Fordham: “We have been able to focus on economic opportunity for the past 30 years because global threats have declined, leading to the most peaceful and prosperous period in human history. Finding a new balance represents a very different challenge than political and business leaders have faced in the past, a combination of combatting the threat to health and economic activity. This will require consent from citizens and will work best in countries that have sources of resilience, such as social cohesion and respected institutions.
The way out of this will be slow and non-linear. It will require investing in systems and strategic planning from the state, alongside personal sacrifices of major aspects of our privacy, probably in the form of submitting to government tracking and surveillance. This will be the trade required for regaining some of our other freedoms.”
Avonhurst’s CEO Jonathan Bloom, feedback:
“In times of uncertainty all service providers, across industries, want to help their clients by offering advice and guidance. Unlike traditional law firms, Avonhurst is determined to assist our clients through the current challenges posed by COVID-19 in a holistic manner (just as with transactions at any other time): by providing our clients with a full suite of political strategy, legal advisory and capital services.
Through our Political Strategy Services team, we offer our sophisticated capital clients clarity in an uncertain geopolitical and macroeconomic climate; our Legal Advisory team helps to analyse legal risk and provides certainty in executing associated transactions; and our Capital Services team will help introduce liquidity where opportunities require additional sources of capital. Avonhurst exists to help address the changing needs of sophisticated capital; we were designed by clients for clients and we are here to help.”
FOR MORE INFORMATION CONTACT Kathryn Adamson, [email protected], Cell (+44) 0771 713 3595
NOTES TO EDITORS
Launched in July 2019 with a considerable consumer portfolio, Avonhurst is devoted to assembly the altering wants of refined capital by offering a bespoke providing comprising authorized, legislative / political danger advisory and capital companies. A gaggle of market-leading founders and influencers from the authorized world have created a revolutionary advisory enterprise devoted to serving to funds, capital suppliers, company debtors and issuers, and secured lenders, navigate the complexities of ever-changing markets.
Tina Fordham has been named within the Prime 100 Geopolitical Specialists (alongside Condoleezza Rice) and the FN’s Prime 100 Most Influential Girls in European Finance. Tina was additionally appointed to the UN’s Excessive Stage Panel on Girls’s Financial Empowerment and a #1 ESG rating from Institutional Investor. Her ground-breaking profession consists of being appointed to the United Nation’s first Excessive-Stage Panel on Girls’s Financial Empowerment (which additionally included IMF president Christine Lagarde), and talking on the United Nations, Davos, the Milken Institute, World Financial institution, and Fortune Most Highly effective Girls, in addition to serving on the Worldwide Advisory Boards of the assume tank Carnegie Europe, and the Faculty of Worldwide and Public Affairs at Columbia College.