Our Views on the Markets and the Economy

Articles, investment updates and economic analysis

Higher interest rates may be needed for the sake of future financial stability

Where should interest rates settle? It is a key economic issue that has figured even in the Conservative Party leadership debates.

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Where are we in the UK economic cycle and what does it mean for policy and markets?

Inflation has figured prominently in our various webinars and comments since early last year. After the global recession and worries about growth in 2020, in the first few months of 2021 inflation became one of our major concerns.

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Fiscal policy has a role to play in generating real, sustainable growth

The fundamental challenge facing the economy is the need for stronger, sustainable growth. This is not a new problem and dates from the 2008 global financial crisis. In its wake, the trend rate of economic growth slowed sharply and has never recovered.

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Key issues facing the UK

There is much pessimism about the UK now. There are many reasons for this but factors that figure prominently include wariness of the Bank of England and monetary policy, pessimism towards sterling and – more recently – concerns that the tight UK labour market may not only feed current inflation but raise concerns about whether the UK’s growth potential is low.

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Why a UK recession is likely

We expect inflation to peak soon, and to remain elevated before decelerating next year. An easing of supply problems and base effects will be responsible for this. However, where inflation may settle is hard to say.

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Key messages to consider around global growth

The world economy looks set to slow sharply this year, with technical recessions in the form of two successive negative quarters of growth likely in a host of countries, including the US, UK, and the major economies of western Europe such as Germany and France. Global growth could slow towards 3% (based on the International Monetary Fund’s measure), and while positive, growth rates on this measure of 3% are often low enough to be referred to as a global recession. This weakness will continue into 2023.

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Five things to know about China now

One of the significant focuses for financial markets in recent weeks has been developments in China. A zero-covid policy has triggered a sharp economic slowdown and also is leading to wider contagion, as supply-chains affecting global trade are impacted. This is the latest evidence of China’s growing importance to the world economy. So, let’s look at five factors in China to better understand the implications of its decisions and how they affect the investment landscape worldwide.

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Bank of England’s remit needs a fundamental rethink

The Bank of England reaches the milestone of a quarter-century of independence in early May. After some initial benefits, it is hard to claim that the experience has been an unbridled success. There are strong reasons this milestone should trigger a fundamental rethink of the Bank’s remit and governance.

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Economic update

The big picture has not fundamentally changed recently. Latest developments reinforce existing market expectations of slowing global growth, elevated inflation and tighter monetary policies in most countries.

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Beijing’s dreams of a stronger role for the yuan are coming true

The war in Ukraine is having economic reverberations around the globe. China has come under increased scrutiny.

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