FXStreet reports that following the policies announced in the Budget economists at HSBC maintain that the UK is well placed to generate a strong economic recovery from Q2 2021.

“UK Chancellor Rishi Sunak announced that levels of taxation would rise in the coming years in order to close a gap in the public finances created by the Covid-19 pandemic.”

“We expect the successful vaccine rollout to lead to a gradual and durable lifting of restrictions, releasing pent-up demand as households run down savings accumulated over the past year. In this context, we think it makes sense to remain overweight UK equities, which are exposed to cyclical sectors that typically benefit from periods of strong economic growth.”

“We continue to see UK gilts as overvalued and prefer to be underweight in this asset class, along with other European government bonds where we are in effect being penalised relative to holding cash. Positively, however, dovish global central banks limit the scope for volatility or a sharp jump in yields.”