The Bank of England: Having it all

Are you in favour of having your cake and eating it? If so, the Bank of England’s latest forecasts are for you. They show the Bank expecting a pick-up in the UK’s growth rate, with little change to the inflation outlook. This is an unusual combination: normally, inflation rises when activity accelerates, as spare capacity … Continue reading “The Bank of England: Having it all”

Will politics shake the global economy out of its torpor in 2017?

The strains of a global economy mired in a low growth, low inflation and low interest rate regime are showing. Populist, anti-establishment and anti-globalisation sentiment is on the rise across the developed markets. If this leads to a marked deterioration in the quality of economic decision making, it could spell the end of a seven-year … Continue reading “Will politics shake the global economy out of its torpor in 2017?”

Going global – and back again

Every year has its upsets, but 2016 seems to have thrown up more than most. With the Brexit referendum, with the election of US President Trump, and with the continued rise of insurgent populist movements elsewhere in the developed world, it feels as though we are heading for an economic and political crunch point. As … Continue reading “Going global – and back again”

Autumn statement 2016: will the sums add up?

The EU referendum result casts a long shadow over the chancellor’s 2016 Autumn Statement, resulting in a surprisingly modest downgrade to the economy’s growth prospects but a sharp worsening of its fiscal outlook. Within these tight parameters, Mr Hammond has done what he can: setting new fiscal rules, highlighting the UK’s long-term challenges, and raising … Continue reading “Autumn statement 2016: will the sums add up?”

Return-free risk

Bonds are at the epicentre of what is a highly fragile environment. “Brexit brought forward the size, scale, scope and speed of more monetary policy. No wonder markets are up!” – Former Federal Reserve (Fed) Governor, Kevin Warsh, July 2016 It is often stated that markets hate uncertainty. Like many things this cycle, this notion has been … Continue reading “Return-free risk”

The case for a UK fiscal reset

With monetary policy measures catching all the headlines this week we thought it worth reflecting on the other side of the equation: fiscal policy. Chancellor Philip Hammond has said that the UK may have to “reset” fiscal policy in the wake of the referendum vote. This sentiment appears to chime with the mood music at … Continue reading “The case for a UK fiscal reset”

Worries should rise when complacency builds

A new Bank of England index measuring uncertainty shows investors are remarkably complacent about Brexit. The Bank’s Quarterly Inflation Report now contains an uncertainty index. It pulls together a range of market, survey and forecast variables to show how much uncertainty there is during a particular month compared to the historical average (or what you … Continue reading “Worries should rise when complacency builds”