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2020 Was Worst Year for the FTSE 100 Since 2008

As 2020 comes to an end, analysts are looking to see how the financial landscape has changed due to Brexit and the coronavirus. One of the clearest signs of the damage done this year is in the stock markets, which dropped heavily in the UK but not in other key exchanges around the planet.

The FTSE Performance

In the UK, the performance of the FTSE 100 in 2020 was worse than anything seen since the crisis of 2008. As it closed for the year, the country’s top index showed a total drop of 14.35%.

This takes into account the recovery that has taken place since the darkest days of March, when the decline in the index was sitting at more than 30%. A look across the world shows that some other financial markets managed to turn the year around far better than the FTSE.

For example, in Germany the DAX recovered to end the year with a 3.5% increase over the full year. Japan, the US and China saw even bigger gains in 2020, while France ended the year with a modest drop of 6.8%.

The poor performance of the British stocks is seen even more clearly when we consider that the Dow Jones index in the US climbed to record highs while the FTSE 100 stumbled to its worst figures in over a decade.

The final trading day of the year in London saw travel companies continue to suffer the brunt of the losses, while the housing sector also lost ground. A large question mark remains over how British companies will be affected by the Brexit deal that was recently agreed.

It should be remembered that the index has a strong focus on some of the sectors that have been hit hardest this year. These include travel and leisure, banks, manufacturing and retail. In these areas, numerous firms have been paying collection agency fees to stay afloat.

What Should 2021 Bring?

In theory, 2021 should be a better year for the UK’s firms. With the Brexit uncertainty now behind us and the Covid-19 vaccine on the horizon, business leaders can start to look forward to a return to something like normal trading conditions.

It is hoped that most of the toughest restrictions imposed on Brits will be removed by April, as the vaccine roll-out starts to show results. However, it is likely to take longer for companies to get back to profits and growth after one of the toughest years on record.

In terms of the stock market, short-term volatility is still expected, but experts hope that things will begin to stabilise from the second quarter of the year onwards. If the global economy recovers well in 2020, this should be reflected in the FTSE’s numbers.

The fact that the UK’s shares have been hit more badly than those in most other countries means that it is hoped that they also have a bigger potential for bouncing back. A climb from the current position of 6,460 to something over 7,000 is certainly possible.