German concern
Data downturn
The latest gloomy data from the German economy has raised genuine fears of a potential slide into recession in the engine room of the eurozone economy. German industrial output slumped in August, falling by 4 per cent from July in its sharpest monthly fall since the midst of the financial crisis five years ago. Coupled with news earlier this week that factory orders in Germany slumped by 5.7 per cent between July and August, economists are now fearful that the third quarter of the year could see another negative GDP growth reading following the 0.2 per cent reversal in the second quarter, thus confirming Germany is in recession.
Post-growth?
IMF warning
The International Monetary Fund (IMF) has scaled back its expectations for growth in the global economy for this year and next and added a warning that growth rates may struggle to ever return to the levels seen before the financial crisis. The IMF’s World Economic Outlook forecast global growth of 3.3 per cent this year, down from its 3.7 per cent forecast in April, with next year expected to see a rise to 3.8 per cent growth. In the short term, financial market complacency, conflict in Ukraine and the Middle East and a potential triple dip recession and deflation in the eurozone are cited as the main risks with 'secular stagnation' a clear longer-term risk.
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Ebola spreads
Europe’s first case
The outbreak of the potential deadly Ebola virus has begun to show signs of spreading with the first case of someone infected in Europe emerging in Spain this week as the US also holds its breath over potential infection from a sufferer who was flown out of West Africa to Texas. In Spain, a nurse who treated a patient repatriated from Sierra Leone has tested positive and a colleague is also being tested, with those they came into contact with under observation. In West Africa, authorities are struggling to check the spread of the disease and the wider ramifications are already being felt with the price of cocoa rising to a three and a half year high on fears for exports from key producing countries such as Sierra Leone. The World Bank has estimated that the ebola outbreak could cost the economies of West Africa $32.6bn over the next 15 months if it is not contained
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UK ok
Future fears?
Despite estimates this week from the National Institute for Economic and Social Research think tank that estimated a 0.7 per cent uplift in the UK’s GDP for the third quarter, there are worrying portents in other data published this week. Firstly, the UK’s manufacturing sector appears to be suffering from the eurozone’s weakness and uncertainty in other global markets with output from the sector only edging ahead by 0.1 per cent between July and August with total industrial production flat. Meanwhile, the cooling in the UK housing market may be gathering pace if the latest mortgage data is a lead indicator with demand for mortgages showing its first fall in nearly three years and the number of mortgage production available also shrinking, most likely in response to efforts to tighten up mortgage criteria earlier this year to cool the market.
Retirement postponed
Funding crisis fear
The UK Department for Work and Pensions has raised concerns over a health funding crisis in the coming decades due to a rapidly ageing population and suggested that the retirement age needs to be rapidly raised in an effort to avoid the public finances being swamped. The DWP has suggested that the retirement age should be increased by six months every year with pensioners being compensated when they finally reached retirement with increased pension payments. Such drastic action is required to mitigate against a predicted doubling in the number of over-85s by 2030. Meanwhile, this ageing of the populace also means that the average age at which people are receiving an inheritance is edging up towards 60.
Double whammy
Leonora Walters wins
Congratulations to Investors Chronicle's deputy personal finance editor, Leonora Walters, who has been voted Best Consumer Journalist and Best Venture Capital Trust Journalist for the second year running at the Association of Investment Companies' Journalist Awards. This is the 16th year that the AIC awards have been presented, and they are voted for by the investment company sector, including analysts.
