Coronavirus: United Kingdom, facing worst recession on record, sees GDP drop 20.4% in Q2

The UK has seen its economy, hit by the coronavirus crisis, suffer a "record" contraction of 20.4% in the second quarter, and is officially facing its worst recession on record, agency figures show National Statistics (ONS), published Wednesday 12 August. 
Economists consider that a country enters a technical recession when it accumulates two consecutive quarters of contraction in its economy. According to the ONS, most of the contraction, which began to be felt in March, occurred in April, an entire month of containment and almost total cessation of activity in the country, which saw production collapsed by 20%.

With a very early recovery in construction sites and manufacturing activity, gross domestic product (GDP) rebounded in May by 2.4% (revised figure), followed by an acceleration in June (+8.7 %) thanks in particular to the reopening of all shops. This is the biggest contraction in the UK economy since the ONS began these quarterly statistics in 1955, he said…

China: banks and insurance united by fate

In China, banks will need to strengthen their capital more than ever in the next 18 months. Insurers looking for long-term investments are most interested in this situation. But each situation will have to be carefully assessed.

China: banks and insurance united by fate

In China, banks and insurance companies find themselves united by force of circumstance. The former are expected to continue to raise significant capital over the next two years. The latter, on the other hand, are natural buyers of the financial products that will be issued by the banks, because this offers them a new investment opportunity.

The banking sector has been the second largest borrower in the Chinese capital market since the start of the year. This could continue to be the case, especially if the Central Bank of China finalizes its recapitalization plan for smaller banks. Even for established banks, there is today a great need for capital to face the insolvency risks of their customers. They must also be able to continue to support the country's growth by funding priority businesses.

Chinese insurers are looking for investment products. According to data collected by S&P Global Ratings, the industry has struggled to maintain double-digit growth in assets under management. The Chinese financial market indeed offers low returns in the long term, and also insurance companies have to respect new rules of resource allocation which force them to support the economy on concrete projects. It should be noted that insurers are already major investors in the capital of banks in China.

This marriage of reason, however, has some constraints. “While products issued by banks should help increase returns on investments for insurers, there are risks. The main one is the concentration of holdings in financial sector assets. In addition, many banks hold mutual capital instruments. This can increase systemic risks, including the exposure of insurers to banks, "notes S&P Global Ratings.