Global Economic Outlook Professor Joe Nellis Professor of f Glo - - PowerPoint PPT Presentation
Global Economic Outlook Professor Joe Nellis Professor of f Glo lobal l Economy www.cranfield.ac.uk Global Economy Outlook Outlook for the Euro Area Outlook for the UK Economy GDP, inflation, interest rates, unemployment,
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▪ Global Economy Outlook ▪ Outlook for the Euro Area ▪ Outlook for the UK Economy ▪ GDP, inflation, interest rates, unemployment, trade ▪ Government Finances ▪ The Housing Market ▪ Looking Ahead…Post BREXIT ▪ Q & A
Source: IMF, January 2020
▪ Downward revision to Global Growth in 2020
▪ Subdued growth for India (5.8% in 2020) ▪ Uncertainty about Global Economy due to
▪ China’s forecast will surely be revised downwards ▪ USA growth revised down to 2.0% in 2020 & 1.7% in 2021
▪ Slow growth forecast for Euro area
▪ Growing at slowest rate for 5 years ▪ Major EU economies struggling for momentum due to effects of: ▪ Sluggish global growth ▪ Trade war uncertainties and tensions ▪ Slower growth in China (hitting exports) ▪ Politics
▪ Inflation remains muted ▪ Well below 2% target ▪ ECB stimulus package announced on 12 September 2019 to boost growth and to create some inflationary pressure: ▪ Negative interest rates! ▪ Restart of Quantitative Easing
▪ UK contributes about 5% of EU Budget, net
▪ In the short-term, about 1/3 of lost UK contribution available from underspending ▪ After that…hard choices: ▪ Members to pay more – Germany? ▪ Or spend less?
▪ New Government hoping for a Post-Election and Post-BREXIT uplift ▪ Easing of uncertainties ▪ Kick–start to some business investment projects ▪ Modest boost to some big-ticket consumer spending ▪ Fiscal stimulus!
▪ But ‘green shoots’ are, so far, slow to emerge…
▪ Economy growing at slowest rate since the GFC ▪ Zero growth last quarter of 2019 ▪ Previous growth supported by stock building ▪ But austerity is over! ▪ Government is spending again in real terms ▪ 11th March Budget will seek to ‘level up’ regions via a National Infrastructure Strategy – and HS2 ▪ Hiring intentions are up ▪ Housing market has been unleashed
▪ Bank of England raised interest rates to 0.75% on 2 August 2018 ▪ First increase since 2009 ▪ Seeking to ‘normalise’ rates ▪ A rate rise is off the agenda – a cut is possible! ▪ Inflation remains low ▪ Extent of spare capacity and wage inflation pressures will be watched carefully
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Source: Trading Economics and ONS
Output per HOUR relative to the UK (%)
Output per JOB relative to the UK (%)
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Source: Trading Economics and ONS
National Debt (% GDP) Budget Deficit (% GDP) Source: Trading Economics and ONS
Source: Trading Economics and ONS
Source: Trading Economics and ONS
Source: Trading Economics and ONS
Source: Nationwide Building Society, ONS Annual % Change in UK House Prices UK House Price to Earnings Ratio
Long-run average
UK FTB Mortgage Repayments as % of Take-Home Pay
Long-run average
Years Taken to Save 20% Deposit Source: Nationwide Building Society, ONS
▪ What will the UK’s future EU relationship look like? ▪ Expected early move to a Free Trade Agreement but… ▪ Tariffs are not the only friction to free trade! ▪ Goodwill is needed! ▪ Until EU relationship is settled, other trade deals will be hard to finalise ▪ How long will other trade deals take? ▪ What bargaining power will the UK have?
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