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Holidays often prompt ideas of a new life in some idyllic part of the world. But money matters and liveable, pleasant places are often pricey. Exchange rates are obviously key and the ups and downs of foreign exchange markets can deliver odd outcomes (at a village market in Provence yesterday I paid around 50% more for a week’s shopping than I would at a Waitrose in London).
While I am taking it easy, the rest of the team have been checking out the cost of living in different cities around the world, drawing on data from the Economist Intelligence Unit (EIU) and Swiss bank, UBS. Both gauge the cost of living using a basket of goods and services priced in US dollars. Slight differences in methodology, the choice of items and cities compared means that the rankings differ across the two league tables, but a number of trends emerge.
Northern European cities – Zurich, Oslo, Geneva and Copenhagen - feature at the top of the cost of living league tables. Such rich countries have high property prices, good public services and, at least in Scandinavia, high levels of taxation.
Our summer quiz offers a test of your knowledge of holiday-related trivia through an economics lens. The answers along with a brief explanation are at the end of this note.
1. What reason does the UK’s Office for National Statistics (ONS) give for the 80% decline in UK residents taking day trips abroad since the 1990s?
A. Better weather in the UK
B. An increase in staycations
C. A decline in ‘booze cruise’ trips
D. Preference for longer holidays
2. Where was the most popular destination for UK holidaymakers in 2017?
3. Where is the cheapest place in the world to buy a McDonalds Big Mac?
4. How much did the average UK holidaymaker spend abroad in 2017? (The aver-age duration was around nine days)
The price of housing in emerging economies and the West has surged since the financial crisis. According to the Organisation of Economic Cooperation and Development (OECD), house prices in the richer, industrialised nations that make up OECD member states, have risen 26% since the trough in 2009. Emerging market economies have seen far greater increases.
In the UK, house prices have risen 37% since 2009. With incomes rising more slowly housing has become more expensive relative to incomes. For homebuyers this effect has been partially mitigated by very low mortgage rates.
Financial crises generally lead to sharp declines in asset prices, making housing more affordable. It’s been different this time because central banks set out to bolster asset prices in the wake of the global crisis by slashing interest rates and undertaking quantitative easing. Cheap money has worked its magic, lifting the price of housing, equities and bonds across the world.
Britain’s recent record on growing productivity and wages has been lacklustre. In the UK GDP per hour worked, the main measure of productivity, has risen by just 2.2% since 2010, less than a third the rate seen in Germany.
The behaviour of the equity market provides useful signals about where investors think the global economy is heading. As we move into the second half of 2018 here’s our mid-year assessment of what equity markets are telling us.
With the holiday season upon us we are launching our summer reading list. All are available free and on-line. You can save these articles on your iPhone or iPad's reading list by opening the links on Safari and tapping on the share icon (the box with an arrow). To print these articles please use the print icons, where available, on the webpages to ensure proper formatting.
The second quarter Deloitte survey of UK Chief Financial Officers released today reveals growing concerns about Brexit and a marked shift towards more defensive balance sheet strategies.
There’s never a shortage of things that could go wrong with the global economy. One that’s joined the list in recent months is worries about the health of some emerging market (EM) economies. In a sign of unease nervous investors have been pulling money out of EM equity and bond funds. What’s happening and why does this matter for the rest of the world?
UK activity has softened since the vote to leave the EU. The UK slowdown has been pronounced, though less severe than widely predicted on the eve of the referendum, and has left the UK slowing into a global recovery.
I don’t recall a time when there has been so much interest and anxiety about the effects of new technology on jobs. Last week I took part in a panel discussion at the House of Commons on the future of work. These are the ideas I tried to convey.
A week ago, we seemed to be on the verge of a second euro crisis with a populist mood threatening to sweep Italy out of the single currency. By the end of the week a coalition government was in place, the markets had cheered up and the newspapers were worrying about other things.