Tale of two Cities: FTSE 100 rises despite economic collapse | Business

Tale of two Cities: FTSE 100 rises despite economic collapse | Business


The economic collapse in Britain during the second quarter of 2020 was the most brutal on record. Unemployment is forecast by the Bank of England to soar to 2.5m by Christmas. The Brexit cliff edge approaches. Yet in the City, the FTSE 100 has been on the up.

Never has the disconnect between financial trading and economic fundamentals appeared so extreme. What explains surging asset prices (the FTSE jumped 2% on the same day it was revealed the economy had slumped by 20%) when the outlook for many workers is so grim?

The “bulls” (market optimists) say the recovery in shares is relatively easy to explain. The collapse in GDP is old news, June alone saw a better-than-expected 8.7% bounce-back, consumer spending and house purchasing is returning to pre-pandemic levels and households are stuffed with cash they did not spend in lockdown.



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