Monetary policy: a bridge over troubled waters?

“The European Central Bank’s actions can only build a bridge to the future. The project must be completed through decisive actions by governments – both individually and collectively – to address the underlying causes of our current challenges.” – European Central Bank President, Mario Draghi, September 2012. Eurozone:  And friends just can’t be found Mr … Continue reading “Monetary policy: a bridge over troubled waters?”

Has QE caused a crisis of capitalism?

Capitalism has delivered prosperity, and countries that adopt the principles of free markets and enterprise are more prosperous. Witness the countries of the former Eastern Bloc. However it would be disingenuous to say everyone at all times benefit from capitalism. It does suffer from crises and the Great Financial Crash (GFC) in 2008 may be … Continue reading “Has QE caused a crisis of capitalism?”

Bank of England cuts interest rates to 0.25%: what next?

The Bank of England has cut rates for the first time in seven years. We offer the latest market forecasts and assess the impact on savings and mortgages. The Bank of England (BoE) announced a quarter point cut in the UK bank rate to 0.25% at midday today (Thursday), marking the first change in more … Continue reading “Bank of England cuts interest rates to 0.25%: what next?”

The economic future of the Euro area

The falls in Euro-area share prices over the last year have been led by big falls in commercial bank shares. In part, this reflects slow progress in dealing with the bad debts and poor conduct of the pre-crash period, leaving many of them with low levels of cash and capital to absorb past losses. It … Continue reading “The economic future of the Euro area”

The negative interest rate experiment

The start of this year has seen a continuation of central banks’ policy experimentations, with Japan joining the eurozone, Switzerland, Denmark and Sweden in employing negative interest rate policies (NIRPs). NIRPs can refer to economies’ base interest rates, or more specifically to negative central bank deposit rates (i.e. the interest rates that central banks pay … Continue reading “The negative interest rate experiment”

Paying to lend? The failure of negative interest rate policy

We look at the economic and market impact of negative interest rate policy and where policymakers might head next. It has been a universal truth that borrowers need to incentivise lenders to provide loans, normally via the promise of the return of capital (hence “My word is my bond”) with additional compensation in the form … Continue reading “Paying to lend? The failure of negative interest rate policy”

Now is not the time for knee-jerk reactions

Much has happened since the referendum. Politicians have come, gone, not gone and we have a new Prime Minister. Markets have whipsawed. All of this has led to a whiff of panic. It is time for a bit of calm and for politicians to chart a safe course for the country.   Some have made … Continue reading “Now is not the time for knee-jerk reactions”

Next stop, stagflation?

Stagflation is a poisonous mix of slow growth, inflation and unemployment. What causes it, and how to deal with its effects, divide opinion among professional economists. It gives central bankers and policy makers a severe headache and because it is difficult to combat, stagflation builds anxiety and uncertainty in financial markets, which is bad for … Continue reading “Next stop, stagflation?”

China outperforms, but is this economy a one-trick pony?

Chinese GDP growth was better than expected in the second quarter, but appears overly reliant on one engine of growth: fiscal stimulus. Chinese GDP growth was unchanged in the second quarter of the year, at 6.7% year-on-year, though it accelerated in quarter-on-quarter terms to 1.8%, from 1.2% previously. The reading, along with other activity data … Continue reading “China outperforms, but is this economy a one-trick pony?”

Flash UK PMI signals post-referendum slump

Private survey data suggest the UK economy has slumped since the result of the EU referendum was announced, increasing the chances of an interest rate cut in August. Markit has released a one-off set of surveys of its purchasing managers’ indices (PMIs), which suggest that both the manufacturing and the services sectors are now contracting … Continue reading “Flash UK PMI signals post-referendum slump”

What does Brexit mean for trade?

The fallout from the United Kingdom’s vote on European Union membership, in which the ‘Leave’ campaign won a narrow victory, will have a wide range of repercussions that are difficult to assess in terms of scope, duration and size. The initial impact of this result has been global, and uncertainty remains a part of the … Continue reading “What does Brexit mean for trade?”

Brexit: keep calm and carry on seizing business opportunities

Despite last week’s referendum result it’s important to remember nothing has actually changed for now‎.  The UK is still a member of the EU, it is still the world’s fifth largest economy and is still home to a huge range of fantastic companies. Our relationship with Europe will evolve over time but I have no … Continue reading “Brexit: keep calm and carry on seizing business opportunities”