Our Views on the Markets and the Economy

How Should We View the Economic Outlook?

How should we view the economic outlook? The key question, as I see it, for the markets, is whether we will have a slump, recession, or a recovery. Is it an L-shaped, U-shaped or V-shaped economic outlook?

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Budget Preview

The economy needs a large and immediate fiscal boost. The latest collapse in bond yields reinforces the attraction of using the maximum possible fiscal levers to stimulate the economy.

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The predicament we face now is unlike 2008, which was a Global Financial Crisis (GFC). This is a Global Health Crisis. Then the focus was on addressing financial issues. Now the focus is about addressing health issues.

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UK Outlook

The outlook for UK assets and markets is being driven by many factors, both global and domestic in nature. The most important immediate influence is global, the developing Covid-19 coronavirus.

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What is the likely economic and financial market impact following the outbreak of the coronavirus (or Covid-19) in China, and its global spread? Naturally, the main focus – as it should be – is on the health implications and containment of this contagious virus. Also, the better the health responses are in limiting the virus’s spread, the more short-lived it will be and the lower the economic cost.

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Analysis of the BOE Interest Rate Decision

When it comes to forward guidance about the future direction of interest rates, or to making comments that might boost economic confidence, the Bank of England (BOE) leaves much to be desired. On Thursday the BOE’s Monetary Policy Committee (MPC) voted 7-2 to leave interest rates unchanged at 0.75%.

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Let's level up the UK economy. That's the aim. Increased infrastructure spending. More housing. Better transport links. A focus on poorly performing regions and northern cities. All combined with deregulation and a desire to cut taxes eventually.

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The Unorthodox Teens: A Review of the Decade

The “unorthodox teens”. This is one way to describe the decade that is just drawing to a close. The beginning of the decade was marked by considerable economic uncertainty, largely because of what had just happened. The first decade of this century had already witnessed the end of the ‘Great moderation’. That was followed by the ‘Great crash mark 2’ in terms of the 2008 Global Financial Crisis and then the ‘Great recession’ of 2009, when the global economy contracted for the only time since the Second World War. Yet few view that decade as Great.

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Inflation Update

UK inflation continues to decelerate. The latest data, released last week, showed the annual rate of consumer price inflation falling to 1.5% in the year to October, from 1.7% in September. The likelihood is that the annual rate will fall significantly further, based both on the analysis from the Bank of England’s latest Monetary Policy Report and the view of most economists, including ourselves.

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UK Update

Despite the political crisis that has engulfed the UK since the 2017 general election, the UK has not suffered an economic crisis. That being said, political uncertainty linked to Brexit, alongside the global slowdown, has weighed upon the economy. Now, with a general election set for December 12th, uncertainty about future policy may weigh in coming weeks upon both the economy and markets.

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