All eyes were on political theatre in Westminster last week. No-deal Brexit looks more likely. And with it some economic disruption – how much is unknown. The global economic outlook is not promising: the US and China are still locked in the trade war and the Eurozone is fighting to stave off a recession.
US/China trade tensions are intensifying. The Chinese authorities announced $75bn 5-10% tariffs on US imports, targeting cars, oil and soya. US President Trump retaliated, unveiling further tariff rises though his stance at the latest G7 meeting was conciliatory. Meanwhile, Federal Reserve Chair Jay Powell hinted at another rate cut soon.
President Trump agreed a détente with President Jinping, bringing some respite from the ongoing trade war. It should provide some short-term relief to markets. But it’s premature to suggest a deal is a foregone conclusion
Global trade tensions are ratcheting up. Whilst the US and China trade blows President Trump warned of a 5% increase in tariffs on Mexican imports, rising 5% a month up to a maximum 25% in October. Meanwhile China’s manufacturing PMI came in a little soft. But tariffs can only partly be blamed there.
The UK labour market remains in rude health, a key support for the household sector. In contrast, US and Chinese retail sales disappointed. Meanwhile, German growth rebounded in early 2019 but the economy remains fragile.
The old saying is that the US economy sneezes and the rest of the world catches cold. This phrase reflected the old influence and dominance of America in the global economy. However, since the worldwide recession a decade ago, China has had a spectacular rise and is challenging US hegemony. Indeed, the concerns now are about the Chinese Dragon spreading its economic germs.
US/Sino trade tensions are rising. US President Trump’s announcement of new tariffs on Chinese imports has prompted threats of retaliation by China, posing downside risks to the global economy as supply chains are disrupt and business sentiment suffers. Meanwhile, UK Q1 GDP data highlights the resilience of the UK economy.
At this time of year, we tend to pause and take stock of where we are economically. And when it comes to 2018, it would be tempting to view things through the prism of Western movies.
We are currently in Atlantic hurricane season, and with five major hurricanes to date, it looks like it will be the most active one in around seven years, as well as the costliest ever. With the Brexit vote and Trump, it could also be said that we are moving into a very unsettled economic and political weather system. Indeed, it is perhaps the stormiest forecast, economically and politically, the UK and US have faced since around 2010. Continue reading
The latest PMI surveys highlight some noteworthy trends on the local, national and global economy from July 2017. This slide pack explores them in more detail.
Key highlights include: Continue reading