The onset of Spring is a reminder of renewal and growth. And so the world economy continues to heal. That positivity is reflected in the latest economic data as well as IMF’s latest outlook, which points to higher growth and less long-term damage than previously expected. Similarly, the 12-month outlook amongst Northern Ireland firms is at a 13-month high. But what confidence there is could be dented by the current political situation and negative news headlines.
Encouraging signs of an economic recovery in the US, EZ and the UK were upstaged by a boat stuck in a canal. Pre-COVID, the phrase “a lorry has broken down on the Westlink” struck fear into Belfast’s rush hour commuters. Imagine that lorry blocking traffic for days or even weeks. Then scale that up to the global Westlink that is the Suez canal.
…from the first lockdown last spring we continue to find ourselves under partial lockdown. Have we frozen in time? The answer is emphatically not. Reports on the recovery gathering pace continues to flow in, with job adverts the latest to show a marked improvement. Locally, some manufacturing sectors (e.g. pharma) are posting record levels of output. But some of us are not so lucky. Italy has entered lockdown, again!
The Department of Finance rarely turns heads. But last week it sent fiscal geeks delirious. While news of extended business rates relief was expected. The surprise was the unveiling of Sir Robert Chote, the former chair of the UK’s OBR, to head up NI’s new Fiscal Council. Effectively an NI OBR. In fiscal terms this is like Glentoran signing Lionel Messi. The second big signing was the IFS’s Paul Johnson to chair the Fiscal Commission looking at what further fiscal powers could be devolved to Stormont. Chapeau!
Chancellor Sunak set out what will (hopefully) be the final phase of the extraordinary support in response to the pandemic. A host of support measures were announced, amounting to a whopping £65bn (around 3% of GDP) worth of spending. Looks like the UK economy is now even better positioned to bridge the gap to recovery. But there was a strong steer on the public finance repair job to come.
The lockdown exit roadmap has been set, cautiously but (hopefully) irreversibly. And come March 3, the Chancellor will table the Budget, outlining the future of the government support schemes which have been so effective in preventing a wider economic fallout. But charting a course out from the extraordinary levels of government spending will be challenging. While markets have awoken to such spending levels igniting inflation down the road.
Continue readingThe global economy seems to be on track for a swift recovery. PMI prints across key geographies improved over the month, notwithstanding the effect of ongoing restrictions. What’s more, firms are increasingly upbeat on the outlook and even indicated reduced firing intentions.
With the release of UK GDP data for December the curtain has been drawn on 2020 (or statistically speaking anyway). But the effects of a year that saw the economy contract by a record 10% will live with us for some time yet. At least there are hints in the data that improvement lies not too far away.
The oft-repeated light at the end of the tunnel may just be glowing a little brighter. Falling infection rates coupled with the timely vaccine rollout, the impressive housing market bounceback and an optimistic forecast set by the Bank of England are all stock for the refreshment station of this long marathon. But this is not the only race we are running. A timely reminder last week came on the miles ahead to protect the natural world.
There’s no doubt the lockdown has taken a significant toll on the UK economy. Add to that Brexit effects are showing up in the form of higher costs and disruptions at the border. But the pace of vaccination remains very impressive, and with it confidence builds of a strong recovery. An outlook echoed by the IMF this past week.
