Thursday, 14 January 2016

Another financial meltdown?

It only seems 5 minutes ago that we had the biggest, deepest recession since the war. The green shoots of recovery have not grown into anything significant. So, are we really heading to another meltdown?

Lot's of the financial predictors think so. We started the year with global stocks and shares crashing, in fact, an eye-watering £1.5 trillion was wiped off the markets globally.

We then had Mr. Positive, George Osbourne, who has done nothing but talk up how things are going for the last 5 years or so, telling us the UK faces ' a dangerous cocktail' of financial risks. Following that, his former right-hand expert, Rupert Harrison, pronounced that Britain and our economic fortunes are 'at the mercy of the global economy'.

So, it is all looking a bit gloomy, according to the experts. Then we have the 'Brexit' issue. Nobody knows what will happen, and what effect it will have on the British economy, either way... To top it all off, RBS are telling their customers sell sell sell.

Oil prices show no signs of recovery. Depending on your perspective, is that a good or a bad thing. For the person at the pump, it is happy days. They have been coining it in for far too long, haven't they. For the stocks and shares market, not so good. Who cares, I hear you say. Well if the multinationals, pension pots and other investments all decline, the economy will too.

We have had a good couple of years, where we, Britain, has shown the rest of the developed world how to do it. Mr. Osbourne stood there, chin up saying we told you this was the way forward, and it seemed he was right. But lately, there have been a few signs of some stalling going on. Industrial output fell in the last quarter of 2015, which is always worrying. Retail did not have the best Christmas ever, and there are some signs that our services sector is starting to wobble a little.

All of this we could probably handle and be OK. But there is the China issue... The world's second-largest economy is slowing, and slowing quickly. Demand for commodities has dropped hugely, which has a massive knock on effect around the globe. There is also some thought that they may have been playing with their output and economic growth figures for quite some time. Confidence is low. We have even seen the pound taking a bit of a tumble.

We do have to be careful though. We do have the habit of reporting the bad and not celebrating the good. We are very good at talking ourselves into these situations though.

No comments:

Post a Comment