Ten years ago today heralded the start of the ‘credit crunch’. The term which was unfamiliar to most people entered dictionaries in 2008. A credit crunch refers to the sudden reduction in the availability of credit or a sudden tightening in the conditions to obtain credit. In short, the availability of credit decreased sharply and the cost of credit increased significantly. In turn, this morphed into the global financial crisis or GFC and was accompanied by a global downturn. The rest they say is history. A decade has passed and hundreds of books have been written about the credit crunch and the global financial crisis that followed.
As the world watches and waits for the outcome of the US election there are signs of modest improvements in performance across the major economies. The Bank of England marked up its 2017 growth forecast. The US continues to create jobs apace. Even the eurozone gives some cause for optimism. What could possibly go wrong? Continue reading
Over two months have passed since the UK voted to leave the EU. Since then, the media and economists have focussed on the incoming economic data to assess the impact. Continue reading
The Bank of England surprised last week by not cutting interest rates. The accompanying statement showed that most members expect to loosen monetary policy at August’s meeting. But given that expectation it left a perculiar question in its aftermath. If then, why not now? Continue reading
Initial signals of the economic fallout post-Brexit vote are weak. That’s weak in both hard to detect as well as hinting at economic fragility. It’s early days but initial signs suggest a sudden shock to business and consumer confidence as well as consumer spending. If true, the next question is, how persistent?
With five weeks to go before the EU referendum the campaigns are now in full swing and scrutinising every piece of data for signs of Brexit nervousness. Yet there’s still a lot going on that isn’t driven by our domestic political agenda and the Bank of England conceeded that the noise is making its job of interpreting the data more difficult. Continue reading
A former Bank of England Governor once said of central banking that “boring is best”. Last week though, central bankers were once again hogging the limelight. First off, the US Federal Reserve, which having raised rates must now work out whether the economy can support them. Second the Bank of Japan, which joined the negative rate club. And with all eyes on the Bank of England this week, “boring” seems a distant memory.
Structural reform. That’s when governments reform markets – for example to boost competition – and invest in assets, from people to roads. Structural reform delivers faster growth but it offers jam tomorrow. To be sure, the Eurozone needs reform in spades but it needs substantial support today to escape weak growth and high unemployment. It’s a picture not unlike Northern Ireland!
Last week, all eyes and ears were on the US Federal Reserve’s Chair Janet Yellen as markets braced themselves for the first interest rate hike in almost a decade. In a rate decision that was broadly seen by economists as something of a ‘coin toss’, the Fed’s policy-setting committee chose to keep rates on hold at almost 0%. This means that the Fed has yet to increase interest rates from their record lows of 2009.
According to the latest Ulster Bank PMI survey, Northern Ireland’s private sector has experienced a rapid recovery and a significant slowdown in less than two years. Whilst a moderation in growth was always anticipated, the speed and scale of the slowdown since the fourth quarter of last year was perhaps faster and more marked than had been expected.