Get ready to say “hello” to inflation

With the collapse of both supply and demand, this was no ordinary recession. But as the world returns to normal, supply will remain subdued as demand explodes. That can only mean one thing, says Merryn Somerset Webb: inflation.

Monster truck
Everyone is scrambling to get big trucks
(Image credit: © FAYEZ NURELDINE/Getty Images)

The post-Covid-19 world will be much the same as the pre-Covid-19 one in lots of ways. We will drift back to our offices. We will flood back to bars and restaurants. We will cram on to planes and cruise ships to catch up on the sunshine and rosé we have mostly missed out on over the last nine months. But one thing might seem a little different: the recovery. We told you at the very start of the crisis that it was something we hadn’t witnessed before – simultaneous demand and supply shocks. Demand collapsed as we were confined to our homes. Supply collapsed as factories shut and transport routes withered. This was no ordinary recession.

It still isn’t. Unemployment has stayed relatively low in the UK so far and has fallen to 6.7% in the US – which may continue given that many US firms will only be able to turn their state-backed loans into grants by showing they have rehired laid-off workers by the end of the year. Consumer confidence has recovered bizarrely fast (reaching a ten-month high earlier this month). And most unusually of all, bank deposits have soared.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.