Toscafund’s Savvas Savouri confident of UK recovery despite deep recession


Savvas Savouri, chief economist and partner at long-running UK hedge fund manager Toscafund Asset Management, believes the UK is well-positioned to emerge from the current coronavirus downturn, despite GDP falling more than 20 per cent in the second quarter, sending the country into its sharpest recession on record.

New data released on Wednesday shows the UK has now slipped into recession for the first time since 2009, in the midst of the Global Financial Crisis, after the economy contracted by 20.4 per cent between April and June this year.

But despite the stark numbers, Savouri believes the UK labour market will recover sooner than is widely being suggested.

“Today’s GDP numbers, startling as they at first appear, do nothing to alter my confidence that the UK will emerge, and indeed is emerging from its large-scale paralysis of Q2,” he said on Wednesday.  “Q2’s decline was less than I had forecast, meaning I confidently stand by my prediction that 2021 records growth over 2020 of 26 per cent.”

In a deep-dive research note this week, Savouri acknowledged the “extreme pain” looming over certain areas of the jobs market as a result of the Covid-19 outbreak, adding the UK will take time to return to the pre-crisis all-time-high employment levels.

But he also said that swathes of UK jobs have been left untouched by the pandemic, while some sectors of the economy have been bolstered during the lockdown. He pointed to UK hotels and holiday resorts, and providers of home entertainment, along with e-commerce, logistics, and e-finance, among others.

Equity-focused manager Toscafund Asset Management was launched in 2000 by Martin Hughes, a well-known and high-profile figure within the hedge fund industry, who earlier worked at US hedge fund Tiger Management.