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Our Christmas Quiz offers an eclectic test of knowledge of economics and business. The answers, and a brief explanation of the factors at work, are at the end of this note.
- Which of the following countries is likely to show the fastest growth of the seven major industrialised nations this year?
- Transparency International's Corruption Perceptions Index ranks 176 countries around the world on levels of public sector corruption, based on the perceptions of public and private sector institutions that operate there. Which of these countries is ranked as having the least corrupt public sector last year?
- Which of the following countries has the most undervalued – or cheapest - housing market, according to The Economist’s house price affordability index?
- In which country do employees work the longest hours each year?
- Three of the following were added to the basket of goods used to calculate the Consumer Price Index (CPI) in the UK this year and three were removed. Which were added?
Computer software downloads
Cooked, sliced turkey
- Britain’s Brexit vote provoked strong reactions. Match the quotes to the people:
Dutch Prime Minister Mark Rutte
“Brexit is a wakeup call for the sleepwalker who is heading towards the abyss…We must not put the blame on the British people… The arrogant words of technocrats angered people. We need progressive reforms to raise a wall against Europskepticism.”
“I think it's a great thing that happened, an amazing vote, very historic. We're very happy.”
“The UK has decided to do a Brexit, I believe even a hard Brexit. Well, then we must go all the way through the UK’s willingness to leave the EU. We have to have this firmness.”
“Now the catastrophic scenario that many had feared has materialised, making the disintegration of the EU practically irreversible.”
"England has collapsed, politically, constitutionally and economically."
"Hurray for the British! Now it is our turn."
- Which of the following cities is ranked as the world’s most liveable, according to the Economist Intelligence Unit’s annual liveability index?
- Which of the following institutions is the most trusted by American citizens?
- UBS regularly tracks prices for a basket of luxury goods in different parts of the world. In October where was it cheapest to buy a Louis Vuitton (Speedy 30) handbag, in US dollar terms?
- Which country has had the world’s highest average inflation rate this year?
- Which city is now the home to the most billionaires?
- In a year of surprises, which event was given the lowest probability of occurring by UK bookmakers* in the week before it happened?
UK vote to leave the EU (June 23rd)
Donald Trump elected as US President (November 8th)
Theresa May becoming UK Prime Minister (13th July)
- With investors facing increasingly low returns from many traditional investments, the case for investing in alternative assets such as wine, classic cars, stamps and whisky has become more tempting. Which of these alternative assets performed best in the year to Q1 2016?
- In a blind test of champagnes by a panel of experts conducted by Which? magazine Aldi’s Veuve Monsigny Champagne Brut scored 78%, higher than the more expensive Veuve Clicquot Yellow Label Ponsardin NV Champagne (72%). The Veuve Clicquot costs £35 a bottle; how much does the Aldi champagne cost?
- Since the 1950s the share of the world’s population living in cities has risen sharply. The UN predicts that 70% of the world’s population will live in urban areas by 2050. What has been one of the indirect consequences of increased urbanisation in the UK?
The price of farmland has dropped
Dogs are getting smaller
Demand for tweed has declined
- In which of the following countries is it possible to most swiftly provide a permanent electricity connection to a newly constructed warehouse?
- Statutory parental leave packages vary widely among OECD nations. Some offer long leave periods on a fraction of the full pay; others offer little leave at full pay. One measure that allows comparison of different regimes is the length of the leave that would be covered if it were paid at 100% of the average worker’s salary. Which of the following countries provides the longest full-pay equivalent leaves to new parents?
- What proportion of UK adults check their mobile phones in the middle of night?
One in three
One in ten
One in seven
Increasing specialisation in production has been a major driver of human welfare in modern times.
The late eighteenth century pioneer of modern economics, Adam Smith, called it the division of labour. Smith argued that splitting production into a series of tasks, each performed by a specialist, whether a worker or a company, would raise productivity and growth.
Before the US election many commentators thought a victory for Donald Trump would be a Brexit-like moment, fuelling uncertainty and hitting equities, business confidence and growth.
So far those predictions have proved wide of the mark. The S&P500 equity index has risen 2.0% since 8th November and the dollar is up 3.4%. The mood among US Chief Financial Officers I spoke to at a Deloitte conference in Washington last week was generally pretty positive. I found no signs of the sort of sharp decline in confidence we saw among UK CFOs in the wake of the Brexit vote.
Donald Trump’s policies are as unconventional as his campaign rhetoric. On the face of it Mr Trump may be about to upend the Washington consensus on immigration, government debt, free trade and America’s role in the world. Going through Mr Trump’s policies over the last couple of weeks has left me amazed at the scale of his ambitions.
So far the effects of Brexit on UK growth have been muted. Most activity data published since the referendum have come in on the high side of expectations. The pace of growth slowed a bit in wake of the referendum, but not much, and less than most had feared.
Advances in science and technology are widely seen as holding the secret to the economic success of nations. Breakthroughs in natural sciences and inventions such as the steam engine, electricity and the internet have transformed human welfare. From Archimedes to Berners-Lee, society celebrates great inventors and scientists.
The manner and the effects of the UK’s exit from the European Union are riven with uncertainties.
But, four months on from the referendum, we have a clearer picture about the near term consequences for the economy.
It has been a torrid couple of weeks for the pound. A growing expectation that the UK is heading out, not just of the EU, but of its single market, has led to a further lurch down in the value of the pound. Against a basket of currencies sterling came close to its lowest ever level last week. Last Friday it was trading at $1.22, down 16% from pre-referendum levels.
The latest Deloitte survey of UK Chief Financial Officers, released this morning, reveals that three months on from the EU referendum Brexit risks continue to loom large for the UK’s largest corporates.
The period since the previous CFO Survey, carried out in the immediate aftermath of the referendum vote, has seen Mrs May’s appointment as Conservative Party leader, a strong rally in equity markets and a run of solid UK and global economic data.
For much of the post-war period, the ideas of British economist John Maynard Keynes held sway in Western Finance Ministries and Central Banks. Keynes believed that government should manage the economy using fiscal policy – public borrowing, spending and taxation.
One of the biggest headaches for Britain's new government is raising productivity. Productivity, or the efficiency of production, is the main driver of human welfare. Raising it is the Holy Grail of economic policy. As Paul Krugman, the economist and Nobel laureate put it, "Productivity isn't everything but in the long run it is almost everything".