Economic Clouds

It’s fair to state that life in the economic-pension-investment-politics fast lane might not be rock n roll for some……but there is never a dull moment.

 

I have spent quite some time over the last few weeks with economists listening to their opinions on where global economies are positioned and what future direction is likely (see……it’s rock n roll really). And when I have trolled through my pages of notes, it is a fair conclusion that the UK economy has held up pretty well when compared to recession threatened areas like Japan and the Euro Zone.

 

Why?

 

We are a consumer driven economy, where 2/3rds of our GDP is based on consumers spending. If we spend, the economy looks good. If we don’t, then we head for recession pretty quickly. The key to spending is low interest rates (more money in our pockets)……and the base rate has been at its lowest ever level in the UK for over 5 years now. Why do you think the Bank of England has delayed putting up interest rates for so long!

 

But there is only so far consumer spending can take us……and sooner or later we will be affected by the ‘global’ slowdown. Japan, as the third largest buyer of goods and services in the world, going into recession does not bring positive connotations to the UK. Add to this the Euro Zone ……barely keeping out of recession and they are the buyers of 40% of everything we make in the UK. It’s concerning.

 

It is not all doom and gloom though. The Japanese government has made a commitment to the tune of $3 trillion to inject into the economy. The Euro Zone is also poised to take similar Quantitative Easing measures……if only Germany would stop blocking such action.

 

So as you can see, it’s never dull. I’ll let you decide if its rock n roll though!