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Top managers of the City of London on the crisis in 2020


The ongoing trade dispute between the US and China; many unknowns about Brexit; weak economic performance of Europe’s largest economy; and growing geopolitical tensions in the Middle East.

These are just a few of the factors that market watchers fear may harm global economic growth next year.

As part of a series of Financial News articles that address the main challenges facing the financial services industry until 2030, the publication asked top executives in the City of London the following question: will there be a global recession in 2020 – or why not?

Peter Harrison, CEO, Schroders

Peter Harrison, CEO, Schroders

The recession seems extremely unlikely given the position of central banks and the growing pressure towards a softer fiscal policy. The UK has dealt with Brexit uncertainty, but there is considerable uncertainty ahead. Government spending will undoubtedly help in the short term, provided that the markets are satisfied with the growing volume of public debt.

Vis Raghavan, CEO of Emea, JPMorgan

Vis Raghavan, CEO of Emea, JPMorgan

We do not expect a recession in 2020, but there are late-cycle symptoms on the market. It is all about confidence, which is fragile and depends on the favorable resolution of prevailing geopolitical topics. I am optimistic that large economies will be quite stable in the absence of any serious shock.

Claire Woodman, CEO of Morgan Stanley International

There will be no recession either in the world or in the UK. Economic growth is likely to intensify, but remains modest. Globally, a brighter picture will be driven by easing trade tensions, while the UK should expect some recovery from a better investment climate, as certainty on the road to Brexit came after the general election in the UK.

Lance Uggla, Chairman and CEO of IHS Markit

Lance Uggla, Chairman and CEO of IHS Markit.
I expect a slowdown in the UK and around the world next year, but I don’t think we will enter a recession. Our PMI [Procurement Managers Index] surveys already show some tentative signs of a global recession in bottom-line trading. Therefore, if we do not see a further escalation of geopolitical tensions, especially in the trade wars, I think we will see that global growth will begin to accelerate again in 2021 – potentially this will happen earlier in Europe thanks to positive monetary policies and fiscal incentives.

Michael Spencer, Chairman of IPGL, and Director of CME Group

There are clear signs of an inevitable recession in Europe and some overheating in China. If the global trade war continues and the US slows down, then yes, there is a real risk of recession.

Keith Skeoch, CEO of Standard Life Aberdeen

Keith Skeoch, CEO of Standard Life Aberdeen

More than ten years have passed since the last recession, but the growth and recession cycle was by no means defeated. The US presidential election next year suggests that President Trump will do everything possible to support the growth of the US economy, which will only delay the inevitable global recession. For Britain, the economy is in a much more dangerous position.

Tiina Lee, CEO, UK and Ireland, Deutsche Bank.

How things are today – I think we will be able to avoid a recession in 2020, but can we expect more from ultra-low or negative interest rates and sluggish growth? Probably yes.

Helena Morrissey, Chair of The Diversity Project

Not. I think that the US will continue to grow quite strongly, and this will help the global economy, and the UK is likely to get a rebound after the election / Brexit. The discussion on the role of central banks and how monetary policy intersects with fiscal policy will continue, but in general, I think we will see a more stimulating fiscal policy. Continental Europe is likely to fight for growth, but the problem of a trade war and relations between China, the United States and Great Britain pose a constant risk.

Karim Haji, Head of Finance, KPMG

I don’t have a crystal ball, but I expect that we will see stagnation rather than recession. If you look at the latest growth potential indicators, the UK ranks 13th after most of our European colleagues. As long as Brexit and any potential deal remain unknown, interest rates will remain low, and significant economic growth will be difficult to achieve.

Paul O’Connor, head of the British asset team, Janus Henderson.

Given the longevity of global economic expansion, investors are naturally focused on determining the next big recession. Over the past two years, the default forecast for a long period has been a recession forecast for 18 months. Nevertheless, although it is not difficult to identify vulnerabilities in the face of aging global growth, we do not see any kind of macroeconomic imbalances that usually precede a recession. We believe that a recession can be avoided in 2020, if the tension in trade between the US and China decreases, we expect the global economy to continue to grow at the same growth rate as this year.

Stephane Boujnah, CEO and Chairman of Euronext.

There is a lot of talk about overdue corrections, but the global stock market is at a record high, and this has happened despite many geopolitical risks, such as Brexit, trade wars, etc. I hope that eliminating some of these uncertainties next year will raise market.

Christoph Rupi, Head of Emea and Apac, MarketAxess

Will there be a recession? Hard to say. Central bank incentives do not actually translate into economic growth. Financial rather than monetary decisions may be needed, as Christine Lagarde, president of the European Central Bank, recently emphasized. The trade war between the US and China will continue to stimulate market sentiment in the US election year. Warning signs are present in economic and market data, which means that the transition from a technical downturn to a real one can be relatively simple. I think there are too many stress points in European, Asian, and emerging markets to make bright spots, such as US stocks, hold back this decline much longer. But I also believe that “all that is needed” [an extremely stimulating monetary policy] will be used if necessary.

Philip Drury, Head of Investment Banking, Emea, Citigroup

The likelihood of a recession is low, given the strength of the US economy. There were no clear signals, and every recession in the markets was redeemed.

Eoyne Murray, Head of Investment, Hermes Asset Management.

We will see how the slowdown in global growth continues, but the asymmetric response function of central banks will prevent a recession.

Michael Horan, Head of Trading Services, Pershing Securities

Will we see a recession? Probably no. Many of us thought that 2019 would be a year of recession, but that was not the case. We came out of 2018 when markets were hit hard, growth slowed and there was huge geopolitical uncertainty in Europe, the USA and Asia. We had [recessionary] signs from the International Monetary Fund, and most central banks warned of negative signs. The interest rate policy in 2019 was very successful, which proves that these fears, of course, were not without reason. If we stick to our understanding that the recession is accompanied by two consecutive quarters of negative growth, I would be surprised if we saw that the United States even came close to it, as they continue to demonstrate incredible stability.

The UK is likely to tiptoe around the edges, due to concerns about Brexit, and may indeed survive a slight contraction at some point in 2020, but probably not two consecutive quarters. On the other hand, it will be Germany that will need to be observed in 2020, since we know that it almost entered into a technical recession, and its export is under intense pressure. Britain’s exit from the EU will also lead to Germany paying a large part of the EU budget.

Bev Shah, founder of City Hive

There are forecasts of a global recession that will cut costs and investment in many industries. Even if Britain succeeds in avoiding this, it will still see an impact on how people work (less reliable contracts), and is likely to see roles / offices moving abroad due to Brexit influence. For some, this may be an opportunity to innovate and build on trends such as the switch to meat substitutes, renewable energy, or healthcare technology.

Nick Ring, CEO of Emea, Columbia Threadneedle

Next year, much can be expected: from civil unrest and ongoing trade wars to political upheavals and market instability, although, in our opinion, this is not a full-blown recession. In late summer, we reached a critical point when leading economic indicators were at levels that had historically been a harbinger of recession in developed markets. However, as the year progressed, we became more confident in a more subtle slowdown, with low positive global and British economic growth being the most likely outcome in 2020. Against this background, “lower but longer,” we continue to take a narrow path that balances growth risks, such as a sudden acceleration of growth, with risks to reduce, including the threat of a deeper recession. Our global approach and research intensity allow us to navigate these macro and market movements well.

Mark Pumphrey, CEO of Emea, Liquidnet

We are unlikely to see a weakening of economic protectionism, and the most visible and troubling example is the ongoing trade war between the two largest economies in the world. Tariffs, higher prices and other trade barriers can limit the growth of the global economy. In turn, this can have a profound effect on investors and traders, because rhetoric and reality lead to the fact that their capital is distributed inefficiently, as a result of which they miss the opportunity to generate alpha, gaining access to fast-growing markets.

Esti Dweck, Global Market Strategy Manager, Natixis Investment Managers

We do not foresee a global recession, because we believe that this will require a recession in the United States, which we do not expect. The US economy remains stable, the US consumer is healthy, the labor market is holding on, and housing is showing signs of improvement following lower rates. However, this view is also based on continued improvement in trade tensions between the US and China. We believe that negotiations will continue until 2020, assuming that tariffs will not increase, and some may even decrease. The UK should benefit from improved global perspectives and clarity on Brexit if the election yields clear results. The first chapter of the Brexit saga could be closed. Cracks appeared, the UK economy is fragile, but in this context, a recession can be avoided.

Michael Needdam, Executive Partner, Kamet Partners

We know that business cycles have not been canceled, and the current cycle is relatively mature. Regardless of whether there will be a recession in 2020, the risks are clearly increasing. One of the advantages of innovative and destructive enterprises is that they can grow rapidly regardless of the economic situation.

Hanneke Smiths, CEO, Newton Investment Management

Although a full-blown recession can be avoided, we certainly expect a slowdown or, at best, stabilization of the global economy. In particular, we see China – for many years as the engine of global economic growth – as an elephant in a china shop, since the renewal of incentive measures was not enough to support the country’s growth, and the lack of liquidity remains a systemic problem. Trade tensions between the US and China, as well as the upcoming US presidential election and the ongoing Brexit saga, exacerbate vulnerability, while the deterioration in fundamentals in the high-yield credit sector is also a concern. Against this background, as central banks and governments around the world are increasingly talking about introducing additional fiscal stimulus and monetary expansion, the implications for different asset classes and sectors can be significant.

Mark Yallop, Chairman of the FICC Market Standards Board.

There will be no recession. Money is still cheap, and as far as the UK is concerned, consumer spending is enough. In addition, business investment should recover from recent uncertainty.

Romy Savova, Founder and CEO of PensionBee

Recessions are usually fueled by tightening lending and breaking asset bubbles. There are some indicators of bloated asset bubbles, including in venture capital and the housing market, but credit still looks light and interest rates remain at historic lows. Quantitative easing may last quite a long time, so it is too early to say whether 2020 will be a year of recession. Market consciousness, of course, is focused on shortcomings and more and more on discipline, so there are first signs.

Andrew Carter, Executive Director, Royal London Asset Management

The global economy begins the year with a low start, but a global recession is unlikely in 2020. As inflation is below target, central banks spent most of 2019 lowering interest rates and leading indicators such as the US housing market improved. We expect President Trump not to step up the trade war, as the November elections will have an impact. A reduction in Brexit uncertainty should help Britain avoid a recession, but Brexit’s risks are unlikely to disappear in one night.

Charlotte Crosswell, CEO, Innovate Finance

The future of the global economic situation remains too complex to predict. Resolutions of recent protests in Hong Kong, trade wars between the US and China, combined with the state of negotiations on Brexit, will form a short-term economic trajectory for the UK and the global economy as a whole. However, early signs point to market correction, and we need to prepare accordingly.