Deficits, debt in The Monday Briefing
Christmas quiz
Our Christmas quiz covers an eclectic mix of topics, many related to economics and business. The answers and a brief explanation of the factors at work are below each question.
A slower-growth China
A New Winter of Discontent? Join us for a webinar this Wednesday morning where I’ll be discussing with a panel of Deloitte specialists, along with Jaguar Land Rover’s finance director, Chris Tye, whether rising inflation, supply bottlenecks and labour shortages mean we are heading for a new Winter of Discontent.
Timing: Wednesday, 24 November 2021, 08:30-10:00 GMT
Register here
Interest rate rises, slowly does it
A year, to paraphrase Harold Wilson, is an eternity in economics. This time last year inflation was on its back and Central Banks were fretting about the risk of deflation. Now Central Banks have the opposite problem, with supply shortages and energy prices propelling inflation to uncomfortably high levels. As with so many trends, good and bad, America leads. Last week financial markets were shaken by news that US inflation had risen to 6.2%, the highest level in 30 years.
O worker, where art thou?
A New Winter of Discontent? Join us for a Deloitte Academy webinar where I’ll be discussing with Deloitte specialists, Raoul Ruparel and Jurga McCluskey, and Jaguar Land Rover’s finance director, Chris Tye, whether rising inflation, supply bottlenecks and labour shortages presage a new Winter of Discontent – and what organisations can do about it.
Timing: Wednesday, 24 November 2021, 08:30-10:00 GMT
Register at: https://deloitte.zoom.us/webinar/register/WN_oJT4MeihSA6gSlgBFHVAKw
From neo-liberalism to neo-statism
Last week’s UK Budget was one of the most consequential of recent decades. The small state, low tax approach of successive Conservative chancellors has gone into reverse. This is a policy choice, not something forced on the government by the demands of the pandemic. The government has made a decision to opt for a bigger state funded by raising taxes’ share of GDP to the highest levels since the post-war Atlee government.
Liquidity and change drive M&A
The return of risk appetite to the boardroom, boosted by vaccine rollouts and strong growth over the summer, has led to a surge in global mergers and acquisitions activity. Around $4tn of deals have been announced since the start of the year, putting 2021 on track to break the previous record set shortly before the financial crisis (strong though these numbers are, the volume of activity, if adjusted for growth in equity values, is below the previous peak).
Inflation: Please, not back to the 1970s
In the wake of a blisteringly fast economic recovery have come bottlenecks, supply shortages and inflation. Over the summer the US Federal Reserve’s favoured measure of inflation hit the highest levels in almost 30 years. Unexpected though it is, today’s inflation surge is widely seen as temporary.
Semiconductors to milkshake shortages: What to do about supply chains
The dislocation between supply and demand created by the pandemic is starting to weigh on the recovery. Growth is being held back by supply problems, labour shortages and rising prices. Along with the effects of the Delta variant, such supply issues led to a sharp drop in China’s Caixin index of service activity in August, leaving the sector contracting for the first time since COVID-19 hit early last year. In the US Friday’s payroll data, one of the most important economic releases of the month, came in far below market expectations. Respondents to the UK manufacturing PMI index blamed shortages of materials, shipping capacity and staff for decelerating output growth in August.
Rising inflation – don’t panic
The V-shaped recovery from the pandemic has brought with it supply shortages and rising prices. From semiconductors to McDonalds milkshakes, stories of shortages abound.
Summer quiz
Our summer quiz offers an eclectic test of knowledge, of pandemic-related developments, many in economics and business. The answers and a brief explanation of the factors at work are at the end of the quiz.