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With the return to work underway here’s our summary of the key developments in the global economy and in politics over the summer.
On the economic front the mood has been fairly positive, with activity nudging higher led by the euro area, Japan and emerging markets. Unemployment has fallen in Europe, North America and Japan since June. The VIX index, a gauge of financial market uncertainty, is close to a 25 year low. In the last three months global equity prices have risen by 5% and the euro by 4%. The dollar and the pound have continued to soften. Copper and oil prices rose over the summer, the later buoyed by Hurricane Harvey.
UK house prices have recovered from the slump that followed the financial crisis. According to the Office of National Statistics UK house prices have risen 45% since their trough in March 2009.
Over the same period earnings have risen by just 16% making life tougher for first-time buyers and those trading up in the housing market.
Some believe older people, and the state, have virtually rigged the system for their benefit. The titles of a recent an influential book by David Willetts, a former Conservative Minister, sums up the mood: “The Pinch: How the Baby Boomers Took Their Children's Future - And Why They Should Give It Back”.
Do you have enough leisure and free time?
If the answer’s no, you are not alone. Most of us feel time pressured and, often stressed in our lives.
On the face of it this is surprising. Most us have more free time and work fewer hours than ever.
In 2016 the average UK worker put in 266 fewer hours a year than in 1970, equivalent to reducing the working year by over seven weeks. It’s a similar story across Europe, and working hours have also declined in famously workaholic societies like the US, South Korea and Japan. In many countries, especially in Europe, holiday entitlements have also improved.
With the summer break upon us here are ten facts to sprinkle into your holiday conversations.
- There is a common misconception that for a Brit making a card transaction overseas in sterling is cheaper than using the local currency. Martin Lewis of moneysavingexpert.com reports that, in fact, it is almost always better to make card transactions in the local currency. Even if the currency conversion provider waives its commission it usually uses an exchange rate with a significant mark-up over that offered by Visa/MasterCard for sterling transactions.
Growth in world trade has been pretty lacklustre in recent years. Much of this weakness has been due to the hangover from global financial crisis. Political hostility to trade liberalisation, shortages of finance and sluggish growth rates have all weighed on exports.
When we last wrote about this, in late 2015, global trade volumes were growing at the slowest pace ever seen outside a recession.
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.
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.
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.
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.