Albion Crown VCT PLC · LSE:CRWC

Albion Crown VCT — Albion Capital — Albion Capital Shareholder Conference 2021

30 slides from Albion Crown VCT's conference presentation, Nov 12, 2021

  1. Slide 1: Albion Capital Shareholder conference

    Albion Capital Shareholder conference Summary: 12th November 2021 • The impact of coronavirus on the UK economy is waning… • …recovery gets underway • Focus on growth, inflation • …wages, unemployment & interest rates • Budget analysis - is big government here to stay? Professor Trevor Williams

  2. Slide 2: A global economic recovery is underway…

    A global economic recovery is underway… % increase in year 10 Forecast 8 6 4 2 0 -2 -4 -6 Advanced economies Emerging market and developing economies World Source: IMF October 2021

  3. Slide 3: …and is strong in historical terms

    …and is strong in historical terms It’s taken half the time to reach pre crisis levels of global GDP in the pandemic compared to the time it took in the financial crisis Source: ONS, Eurostat, BEA, CAO, CNBS and Citi Research.

  4. Slide 4: In the UK, output is rebounding sharply (23.5% year on year in Q2)…

    Source: ONS 100 105 70 75 80 85 90 95 Jan 2007 May 2007 Sep 2007 Jan 2008 May 2008 Sep 2008 Jan 2009 May 2009 2007/8 Sep 2009 Jan 2010 financial crisis May 2010 Sep 2010 Jan 2011 May 2011 Sep 2011 Jan 2012 May 2012 Sep 2012 Jan 2013 May 2013 Sep 2013 Jan 2014 May 2014 Monthly GDP Sep 2014 Jan 2015 M

  5. Slide 5: OBR expects the pre-Covid GDP level to be reached this year but BOE in Q1 2022

    OBR expects the pre-Covid GDP level to be reached this year but BOE in Q1 2022 110 105 100 January 2020 = 100 95 90 85 March 2020 forecast 80 March 2021 forecast O ctober 2021 forecast 75 Adjusted outturn Adjusted outturn (latest data) 70 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar 2020

  6. Slide 6: The number furloughed has fallen sharply from 9m to just 1.6m…

    The number furloughed has fallen sharply from 9m to just 1.6m… The number of people on furlough is 1.6m but when it ends this month, what happens? Source: Her Majesty's Revenue and Customs – Coronavirus Job Retention Scheme statistics and O=ce for National Statistics – Business Insights and Conditio

  7. Slide 7: …and the employment picture is strengthening

    …and the employment picture is strengthening Sources: ONS . Over the last quarter, there have been increases in the employment rates and decreases in the unemployment rates for both men and women.

  8. Slide 8: UK average earnings is rising strongly, though driven by those on lower pay

    UK average earnings is rising strongly, though driven by those on lower pay Sources: ONS, OBR .

  9. Slide 9: But real pay has only just turned positive

    4.0 6.0 8.0 0.0 2.0 10.0 -6.0 -4.0 -2.0 -8.0 Nov-Jan 2007 Mar-May 2007 Jul-Sep 2007 Nov-Jan 2008 Mar-May 2008 % increase in year Jul-Sep 2008 Nov-Jan 2009 Mar-May 2009 Jul-Sep 2009 Nov-Jan 2010 Mar-May 2010 Jul-Sep 2010 Nov-Jan 2011 Mar-May 2011 Jul-Sep 2011 Nov-Jan 2012 Mar-May 2012 Jul-Sep 2012 No

  10. Slide 10: …and in cash terms, real pay is only £8 above the 2007 peak

    20 440 450 460 470 480 490 500 510 520 530 07 20 Q1 07 20 Q3 08 20 Q1 08 20 Q3 09 20 Q1 09 20 Q3 10 20 Q1 10 20 Q3 11 20 Q1 11 20 Q3 12 20 Q1 12 20 Q3 13 20 Q1 13 20 Q3 14 The level of real pay in the UK, £ per week average 20 Q1 14 20 Q3 15 20 Q1 15 20 Q3 16 20 Q1 16 20 Q3 17 20 Q1 17 20 Q3 18 20 Q

  11. Slide 11: Higher pay and falling unemployment mean robust household savings…

    Economic outlook Higher pay and falling unemployment mean robust household savings… ChartHousehold 2.10: Household saving savings, % ratio income of disposable …but a large proportion will be saved 30 March 2020 forecast Per cent Forecast November 2020 forecast 25 Hold in bank account March 2021 for

  12. Slide 12: Households borrowing only for mortgages

    Households borrowing only for mortgages Approvals for house purchases, an indicator of future borrowing, ticked down in August to 74,500 from 75,100 in July. This is the lowest since July 2020 but remain above pre- February 2020 levels. Approvals for remortgaging (which only capture remortgaging wit

  13. Slide 13: Annual UK CPIH inflation eased to 2.9% in September 2021…

    Annual UK CPIH inflation eased to 2.9% in September 2021… Given that the owner occupiers' housing costs (OOH) component accounts for around 19% of the CPIH, it is the main driver for differences between the CPIH and CPI inflation rates.

  14. Slide 14: …and UK consumer price inflation expectations have risen, albeit modestly

    …and UK consumer price inflation expectations have risen, albeit modestly Financial markets inflation expectations, 5y5y, % yoy UK households' inflation expectations, Citi/YouGov survey, % yoy 5 5 4.5 GBR 4 GBR 4 3.5 3 3 2.5 2 2 1.5 1 1 0.5 0 0 2008 2010 2012 2014 2016 2018 2020 2005 2008 2011 2014

  15. Slide 15: Global supply side costs are rising as demand recovers faster than output

    Global supply side costs are rising as demand recovers faster than output January 2019=100 Brent Crude Oil Metals and minerals Food Shipping costs (RHS) 250 500 200 400 150 300 100 200 50 100 0 0 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Source: Refinitiv; and OECD calculations.

  16. Slide 16: Big upward revision to CPI by BOE but fall back to target in 2023/4

    Big upward revision to CPI by BOE but fall back to target in 2023/4

  17. Slide 17: One reason for the rate pause is that energy price rises are expected to be transitory

    One reason for the rate pause is that energy price rises are expected to be transitory 80.0 pence per therm 160.0 £ per barrel Oil (left) March 2021 forecast Oil (left) March 2021 forecast Forecasts 70.0 Gas - right scale October 2021 forecast 140.0 Gas - right scale March 2021 forecast 60.0 120.0 5

  18. Slide 18: UK bank rate to rise sharper and earlier but to remain low historically…

    UK bank rate to rise sharper and earlier but to remain low historically… % Forecasts 0.8 October 2021 forecast 0.7 October 2021 pre-measures forecast 0.6 March 2021 forecast 0.5 0.4 0.3 First rise in 0.2 February 2022 looks likely on 0.1 OBR rate 0.0 forecasts

  19. Slide 19: …as robust growth likely to last only 2 years…

    …as robust growth likely to last only 2 years… % increase in year 20 UK economic forecasts 2020 -9.9% 15 2021 6.5% 2022 6.0% Growth to slow 10 2023 2.1% sharply from 2024 1.3% 2023 5 0 -5 -10 OBR expects Covid and Brexit to have negative -15 long-term impact on GDP -20 -25 2013Q3 2014Q3 2019Q1 2020Q

  20. Slide 20: UK goods exports are down sharply on pre-pandemic, pre-Brexit levels, v others

    energy prices and so on”. UK goods exports are down sharply on pre-pandemic, pre-Brexit levels, v others Real values, rolling three-month, August 2019=100 Source: ONS, Refinitiv

  21. Slide 21: Budget special

    Budget special

  22. Slide 22: Even after the pandemic tax and spend will be above precrisis levels

    1 0/ 29 /21 ,11 :59PM Suna k de fi esh awk ishinstincts toove rse ema ssi vee xpa nsionofsta te|Fina ncia lTi mes Even after the pandemic tax and spend will be above precrisis levels

  23. Slide 23: Public sector net debt to remain near 90% of GDP but fall gently

    Public sector net debt to remain near 90% of GDP but fall gently Forecasts % of GDP 120 March 2020 forecast 110 100 90 October 2021 forecast 80 70 March 2021 forecast 60 50 40 30 20

  24. Slide 24: Future drivers of increased state spending

    / 29 /21 ,11 :59PM Suna k de fi esh awk ishinstincts toove rse ema ssi vee xpa nsionofsta te|Fi nanci alTi mes Future drivers of increased state spending % shares of gdp

  25. Slide 25: But highest tax share since 1951/2

    26 28 30 32 34 36 38 1948-49 1951-52 1954-55 1957-58 1960-61 Per cent of GDP 1963-64 1966-67 1969-70 1972-73 1975-76 1978-79 Outturn 1981-82 1984-85 1987-88 March 2021 forecast March 2020 forecast 1990-91 October 2021 forecast 1993-94 1996-97 1999-00 2002-03 But highest tax share since 1951/2 (Hugh

  26. Slide 26: None of this avoids cost of living crisis - stagnation in income growth to continue

    energy bills, which Tory MPs had called for. None of this avoids cost of living crisis - stagnation in income growth to continue owing to weak productivity Average real earnings and real disposable income, £’000 Source: IFS

  27. Slide 27: But UK taxes are still low by international standards

    But UK taxes are still low by international standards Government revenue as of GDP, The UK ranks 17th out of 24 in terms of tax revenue as a share of GDP…plus what programs would you cut?

  28. Slide 28: Luckily, low interest rates make the debt burden more affordable

    rates are also quite arbitrary. Luckily, low interest rates make the debt burden more affordable % GDP A 1% rise in long term interest rates would raise debt interest payments by £23bn.

  29. Slide 29: SUMMARY / overview

    SUMMARY / overview • The UK economy is in a sharp – but incomplete and unbalanced – recovery. A quick vaccine rollout, easing restrictions, loose monetary policy and the extension of fiscal support have all underpinned a faster economic reopening in recent months than was anticipated at the start of

  30. Slide 30: Questions

    Questions

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