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What is the biggest question facing the European Union?
Brexit is the obvious candidate. The secession of a member state is an almost unimagined contingency. But for all the historic significance of Brexit the future direction of the EU itself is, for my money, a more important question.
Spending money just keeps getting easier. Internet shopping, electronic bank transfers, contactless and mobile payments are increasingly popular ways of spending. Last year the number of contactless payments tripled in the UK and on-line shopping rose nearly 20%. Digital versions of traditional central bank currencies are in the ascendant in the West.
This Wednesday marks the anniversary of Donald Trump’s election victory, one of the most surprising and unexpected in US history. A year on we reflect on what effect the new president has had on the US economy and financial markets.
Cheap money has driven a surge in asset prices around the world. The pries of equities and bonds are at record highs and in much of the world so, too, are house prices.
One class of assets that has been late to the party, and doesn’t look pricey, is commodities.
This broad category includes everything from agricultural products, such as rice, to base and precious metals and most energy sources.
The Monday Briefing reached its tenth birthday over the summer. This week’s Briefing offers some thoughts on the lessons we’ve learned and the errors and successes we’ve made along the way.
Perhaps the most obvious lesson is that the economy depends on a stable financial system. In getting this right before the crisis, and emphasising it in the Briefing, I can’t claim great prescience. The devastating effect of the bursting of Japan’s banking and asset bubble in the early 1990s provided me, and others of my generation, with a graphic illustration of the effects of a financial collapse.
A personal view from Ian Stewart, Deloitte's Chief Economist in the UK. Subscribe to & view previous editions at: http://blogs.deloitte.co.uk/mondaybriefing/
The latest Deloitte survey of UK Chief Financial Officers, released this morning, shows a rebound in optimism after the sharp decline in the wake of June's General Election. Perceptions of uncertainty have declined and are running at almost half the levels prevailing after last year’s EU referendum.
In four weeks’ time the Bank of England is likely to raise UK interest rates for the first time in ten years. The Bank’s Governor, Mark Carney, has gone out of his way to signal that a rate rise is on the cards. Financial markets and economists are betting that the Bank’s Monetary Policy Committee will hike by 25 basis points at their 2nd November meeting, taking UK interest rates up to 0.5%.
Other central banks are also edging away from ultra-easy monetary policy, with America leading the way.
The financial crisis seemed to mark a step change towards higher levels of uncertainty and slower growth rates. A less certain world meant less risk taking and fewer big purchases. Companies and households battened down hatches, focusing on reducing their costs and building up savings.
Ten years on from the crisis we have become more accustomed, though not immune, to uncertainty. The cliché is that the only certainty is uncertainty.
Earlier this month I was on a panel with a former banker and an academic in Austria discussing the lessons of the financial crisis.
At one level the crisis was mind-boggingly complex, with obscure, linked financial structures blowing up, spreading risk through the system. At another level it was pretty simple.
Invention lies at the heart of industry and economics. The question of what systems best foster innovation and which innovations have the greatest effect on economic welfare have long occupied economists.
Over the last year the author and economist Tim Harford has presented a BBC radio series describing the fifty innovations he believes have ‘made the modern economy’.