Monetary policy, inflation in The Monday Briefing
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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.
1. Four of the following were added to the basket of goods used to calculate consumer price inflation in the UK this year, while two were removed from the basket. Which were added?
a) Baking trays
b) Smart speakers
c) Three-piece suits
d) Dog treats
f) Electric toothbrushes
Expectations of business change over time. The tax and regulatory environment shift with the political cycle. Society’s expectations change too, and in recent years they have risen.
While they disagree on many things, the UK’s Labour and Conservative parties seem to favour an expansion in the state – though to very differing degrees.
Last week US equities hit new highs on hopes that China and the US would reach an agreement in their 18-month trade dispute. Financial markets think a deal would reduce uncertainty, boosting investment and growth.
This time last year central banks in the rich world were poised to tighten monetary policy. The US Federal Reserve was expected to continue raising interest rates and the European Central Bank (ECB) president Mario Draghi had announced the end of its programme of quantitative easing.
The car industry is a bellwether of the global economy. When global trade and growth boom so, too, do car sales. With growth slowing and globalisation under pressure, the auto industry is suffering. Car production and sales are falling across most of the rich world and in China and India. The downturn in the sector is the most pronounced since the global financial crisis.
Last week data showed that the number of people in employment in the UK has fallen by 56,000. Long the standout success in Britain’s recovery the jobs market is feeling the chill winds of weaker growth. Brexit has played a role, but weakening UK activity is small part of a wider, global story.
Globalisation has been one of the defining features of the modern era. It has been marked by the movement of goods, services, ideas, capital and people through a plethora of cross-border networks.
This morning we are launching our third quarter “Global economy in charts” report, available here – https://blogs.deloitte.co.uk/mondaybriefing/2019/09
Created by my colleague Debo, the report examines the big global macro trends and challenges. Charts can be cut and pasted into your own presentations and reports. Do drop Debo a line at email@example.com with ideas and comments.