In Brief

UK & Europe

• Signs of a strong economic rebound in countries reopening after pandemic lockdowns were tempered by growing concern late in the quarter about a COVID-19 resurgence in parts of the U.S., China, Australia and Europe. 

• With European economies experiencing GDP contractions in the double digits, and forecasts suggesting it could take until 2022 to return to pre-crisis output levels, monetary stimulus appears here to stay. With no signs of inflation on the horizon, European central banks seem set to keep rates at their lower bounds for the next four to five years. 

• European central banks, in line with peers globally, have continued to provide markets with monetary and fiscal support to avert a repeat of the March liquidity crunch.

• Beyond the pandemic, European markets will be influenced in the second half of 2020 by any resurgence of U.S.-China trade tensions, the U.S. presidential election and the expiration of the Brexit transition on 31 December.