In European financial markets, government bonds hold a special status. According to accounting rules, EU sovereign debt is considered risk-free. That is, banks don’t need to set aside extra capital in case these bonds go bad before they’re due, whether issued by Germany or Greece—yes, even Greece!
What does it mean to “Make America Great Again,” economically speaking?
It’s hard to describe much in the US as normal these days. However, there is one aspect where some semblance of normalcy prevails: monetary policy.
Even if you’re only a little superstitious about tempting fate, the latest comments from American and British central bank chiefs may have you stockpiling gold and donning a tinfoil hat.
Brits have a reputation for liking a tipple. Last year, drinkers in the UK brought nearly £14 billion ($18.2 billion) worth of wine, or roughly 26 bottles per person, according to the IWSR. Almost all of it—99%—came from abroad, making the UK the largest per-capita importer of wine in the world.
As far as warnings signals go, this is a pretty clear one. The UK’s household savings ratio—a straightforward measure of income minus spending—dropped to 1.7% in the first quarter of 2017, the lowest it’s been since at least the early 1960s, when record began, according to the Office for National Statistics.
When the Ebola epidemic broke out in West Africa in 2014, in took several months to get large amounts money (around $100 million) to the countries that needed it, according to the World Bank. In that time, thousands of people died. In an effort to fight the next pandemic faster, the World Bank has turned to global financial markets, issuing $425 million in “pandemic bonds” and related derivatives to pay for emergency relief.
Much has already been made about how artificial intelligence is going to transform our lives, ranging from visions of the future in which robots make humans obsolete to utopias in which technology solves intractable problems and frees up people to pursue their passions. Consultancy firm PwC ran the numbers, and came up with a relatively rosy scenario with regards to the impact AI will have on the global economy. By 2030, global GDP could increase by 14%, or $15.7 trillion, because of AI, the firm said in a report today (pdf).
Financial markets have a new hero. France’s 39-year-old president, Emmanuel Macron, has charmed his peers on the world stage and taken investors under his spell too.
Exactly one year ago today, the UK voted 52% to 48% to leave the European Union after more than 40 years of membership. For now, you could argue that not much has changed—the UK won’t actually leave the EU until March 2019 and it’s still not even agreed what Brexit ultimately means. But there’s one big change that’s impossible to dispute: the effect of the vote on the pound.
Today, Brexit turns one year old and how time flies! While, the UK’s vote to leave the European Union and “take back control” was always going to be complicated, the issue has managed to become even more confusing over the past year. It’s still unclear what Brexit will ultimately mean and more divisions are emerging in the government since British prime minister Theresa May called a “snap general election” June 8 and lost her mandate. This hasn’t stopped negotiations between the UK and EU formally starting this week—even without a fully-functioning British government.
Brexit has divided the UK politically—last week’s election and the resulting hung parliament are the latest example. Now, the issue has also divided the Bank of England.
Brexit hasn’t come to pass yet—in fact, negotiations on the divorce between the UK and EU haven’t even begun—but the economic cost of the vote is quickly catching up with the British public.
Last week, Brits went to the polls for the third time in two years and, once again, defied expectations.
Updated on June 11: After voting closed in France, pollsters said Macron’s party is projected to win 390-430 seats in parliament after getting 32% of the vote in the first round of the legislative elections (link in French). The abstention rate is forecast to be about 51% of voters. If the results are confirmed in the second round of voting on June 18, Macron will preside over one of the largest majorities in post-war France.
Of all the possible outcomes of yesterday’s UK election, a so-called hung parliament was deemed the most damaging for the pound before the vote. Now, here we are, with a hung parliament.
This post was updated at 7:00am UK time.
First, the good news. The US unemployment rate fell to 4.3% in May, the lowest since 2001 (pdf). Keep that in mind when you consider the rest of today’s somewhat soggy job report.
For years, Italy was the slowest growing economy in the G7, by some distance. But a revision to the country’s first-quarter GDP growth today has pushed it up the rankings. In terms of annualized growth in the first quarter of this year, the bottom spots now belong to the US and UK:
British prime minister Theresa May had a plan. Catch rivals off guard by calling a “snap” general election after repeated denials that you would do such a thing. Tend to a 20-percentage-point polling lead over the Labour opposition party during a short campaign. Win big on election day, June 8, and use the thumping new mandate at home as a platform to push around the eurocrats in Brussels during the subsequent Brexit negotiations and quiet any rebels at home. Put feet up.
“I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me.”
“The cod is our friend, and suddenly one is worth 200 kroner!”
A president is accused of obstructing justice. Secret recordings may exist that incriminate the leader. Protesters take to the streets to demand impeachment. The president’s approval ratings plunge. The stock market crashes.
It’s been a miserable decade for British workers.
