Asset prices in The Monday Briefing

Why we should worry less about the spectacular stuff

Monday Briefing Risk

The world seems like a much more uncertain place today than it was before the financial crisis. The International Monetary Fund reckons that macroeconomic risk is running at twice the level it was before the failure of Lehman in 2008. The backwash from the crisis, debt-laden governments, low productivity and risk averse businesses and banks, has spelt weaker growth.

Uncertainty has also been fueled by shocks such as political surprises and natural or man-made disasters. In the last few years markets have had to contend with a stream of worries, from conflict in Eastern Ukraine and the Middle East, to Brexit, the Gulf of Mexico oil spill and Donald Trump’s surprise victory. 

But what lasting effect do such external shocks have on markets and economies?

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Posted on 24/07/2017

Summer reading list

Monday Briefing_Summer reading_flower
With the holiday season almost upon us we are launching our summer reading list. The Economics Team read dozens of articles to come up with our top six picks for summer reading. 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 arrow next to the address bar. To print these articles please use the print icons, where available, on the webpages to ensure the whole article comes out. The Monday Briefing will continue to run throughout the summer.

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Posted on 17/07/2017

Post-election dip in UK business confidence

CFO Survey image_Maze
The latest Deloitte survey of UK Chief Financial Officers, released this morning, shows a fall in business optimism in the wake of the General Election on 8th June.

Despite speculation that the result of the election could mean a closer long term relationship between the UK and the EU, CFO concerns about Brexit have risen.

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Posted on 10/07/2017

Savings slump, credit booms

Monday Briefing empty nest

News last week of a collapse in the UK savings ratio and a surge in consumer borrowing suggest that the consumer party may be getting out of hand.

Perhaps we shouldn’t be too surprised. Following the financial crisis the Bank of England slashed interest rates and printed money to kick start the economy. Consumers have responded in text book fashion.

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Posted on 03/07/2017

Whatever happened to austerity?

Monday Briefing Credit Cards
Last week a Times headline proclaimed that “Austerity is Over” in the UK. It may have been an exaggeration, but the headline captured the spirit of the time.

Labour’s anti-austerity rhetoric played well with voters during the election campaign. The Conservatives, who ran their 2010 and 2015 election campaigns on the need to reduce public debt, have gone quiet on austerity. As Torsten Bell at the Resolution Foundation notes, the deficit got a mere three mentions in the 2017 Conservative manifesto, down from 17 in 2015.

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Posted on 19/06/2017

Equity markets party

Monday Briefing Chart
Equity markets seem to be partying like there’s no tomorrow. After a surge in recent weeks equity markets in the US, Germany and the UK are close to all-time highs.

If you had bought UK equities a year ago, five weeks before the EU referendum, you would have made a 27% return.

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Posted on 22/05/2017

Localism vs globalisation, more complex than it looks

Monday Briefing cars and globalisation
Western politics has developed a more nationalist character in recent years. In Europe populist parties claim to champion national interest against globalisation while in the US Bernie Sanders and Donald Trump have broken with the free trade consensus that has lasted since 1945.

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Posted on 16/05/2017

The UK's productivity puzzle

Deloitte-uk-monday-briefing

Slow productivity growth is one of the biggest topics shaping current economic discourse.

It is hard to overstate the importance of productivity in driving improvements in living standards. Since 1850, UK GDP per head has risen 20-fold, transforming our standards of living. If productivity had remained flat over that period, GDP per head would only have doubled.

UK labour productivity rose at around 2% a year from the seventies but has stagnated since the financial crisis. British productivity now remains only slightly higher than its pre-crisis peak at the end of 2007.

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Posted on 18/04/2017

UK corporate spirits revive

CFO Survey Q1 2017 Blog

The last Deloitte survey of UK Chief Financial Officers shows a further easing of the Brexit shock that hit corporate spirits last summer. The full report is available at:

http://deloi.tt/2enCLQa

CFO perceptions of external macro-economic and financial uncertainty have almost halved since last year’s EU referendum. Business optimism, which dropped to the lowest level in nine years last July, has risen to an 18-month high.

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Posted on 03/04/2017

Hoping for a normal, not a New Normal, recovery

Monday Briefing growth
It is perhaps odd that despite gloomy news stories about the risks to growth the world economy is recovering. And this is a rare thing, a synchronised global recovery with activity strengthening in developed and emerging markets for the first time since 2010.

Leading indicators for growth are flashing green. Singaporean export growth, a barometer of global demand, has hit a two-year high. Chinese electricity consumption has rebounded.

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Posted on 27/03/2017