The Monday Briefing
A succinct and eclectic weekly take on economics and finance from Ian Stewart, Deloitte's Chief Economist in the UK
Brexonomics
Amid the legion of uncertainties surrounding Brexit is there much that can be said with some degree of confidence? Economic forecasts are hardly renowned for their accuracy, but they provide a starting point for thinking about the potential economic effects of Brexit.
Among think tanks, private sector groups and international organisations there’s a broad consensus that a no-deal exit would hit growth hard this year. But most forecasters think that even with a no deal the UK would probably skirt a serious recession, with its growth rate dropping from a lacklustre 1.4% in 2018 to around just 0.3% this year.
At this point the consensus breaks down. Some forecasters think after the initial shock activity would bounce back in 2020. Others believe the damage would be longer lasting and would keep growth around the 0.3% mark in 2020 too. The ratings agency S&P is the most pessimistic of the forecasters we’ve seen. It thinks a no-deal Brexit would generate a “moderate recession lasting four or five quarters”.
Who made money in 2018?
Last year was a tough one for investors, with global equity markets falling 10% overall. For UK investors most major asset classes – equities, bonds and residential property – either fell in value or saw only small gains.
Seven news stories for Christmas
Here is a choice selection of the "and finally" news stories from the Monday Briefing in 2018. The Monday Briefing is taking a break until Monday 14th January. In the meantime the Deloitte economics team - Ian, Debo and Tom - wish you a merry Christmas and a happy New Year.
Christmas quiz
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.
Running out of workers
The global recovery since the financial crisis has not been vigorous. But it has been running for 11 years and it has absorbed a lot of workers. Globally a record 3.3 billion people are in work, 14% more than ten years ago.
UK growth with and without a Brexit deal
Depending on how Brexit goes 2019 could see UK growth accelerate or almost grind to a halt. So, say two forecasting groups which have modelled the economic effects of the UK’s exit from the EU.
Learning to live with slower Chinese growth
In time, breakneck growth in the early stages of industrialisation gives way to slower growth. All industrialised nations experience this change as a manufacturing boom fuelled by cheap labour runs its course.
Recessions always start out as downturns
Slowing growth in Europe and emerging markets and October’s equity sell off have got economists pondering when the next recession might strike.
Downs and ups in equity investing
It ended on a high note last week, but overall October was a rotten month for equities. The world equity market has just had its worst month since 2012, with the benchmark MSCI world index down 7% in October. This fall has more than reversed earlier gains, leaving the global index down 3% so far this year.
Global Economy in Charts
Five features of Britain’s jobs market
The UK is running out of workers. At 4.0% the unemployment rate is at the lowest level since the early 1970s. This is below the rate in historically low-unemployment countries including Sweden, Denmark and Canada. A record 832,000 jobs are unfilled in the UK (two of them in the economics team). The attrition rate, the rate at which people change jobs, has shot up to its highest level since records began in 2001.