“I am not going to offer the incoming president advice about how to conduct himself”. So said Federal Reserve boss Janet Yellen last week, as the US central bank raised interest rates for only the second time in a decade.
The rate increase, in and of itself, wasn’t surprising. For months, various members of the Fed’s policy-making board have been publicly stating that higher rates were in the works. Still, despite the “quarter point” hike from 0.5pc to 0.75pc being “baked into” asset prices ahead of Wednesday’s announcement, the market reaction has been quite volatile.
Theresa May has long refused to give a running commentary on her negotiations with the European Union. Last week, in a moment of high Parliamentary drama, the Prime Minister conceded her government will now publish a “Brexit plan” before triggering Article 50 by March next year.
Having backed Brexit, I’ve always recognized it may be unwise for the government to disclose its desired negotiating outcome. These two statements aren’t linked. However you voted in June, everyone should acknowledge the potential downsides of the UK showing its hand ahead of what could be some extremely hard bargaining.
“In the absence of a major financial meltdown, oil will end 2016 north of $60 a barrel.” So stated this column at the turn of the year – a forecasting flourish possibly fuelled by one Christmas brandy too many.
Back then, in early January, having plunged all the way from $115 in mid-2014, Brent crude was trading at $37 a barrel. In February, oil fell again, going below $30. At that point, my $60 prediction looked silly.
Last week’s Autumn Statement has provoked an extended gloom-a-thon. Those hoping to reverse the UK’s Brexit referendum, inevitably, were out in force. Scandalized at not getting their own way, countless political and media bien pensants have been doing their utmost to talk down the British economy ever since the vote went against them five months ago.
The negativity that’s followed Chancellor Phillip Hammond’s first Commons set-piece is just their latest attempt to spread panic and cower the government ahead of crucial negotiations on our European Union exit.
Has there ever been so much uncertainty surrounding an Autumn Statement? Phillip Hammond, while a significant player within the Conservative party for some time, has become Chancellor despite having little public profile beyond the “Westminster bubble”.
The fiscal views of the UK’s bean-counter-in-chief, moreover, remain something of an enigma. No-one seems able to say definitively if Hammond will continue with the Tories’ “austerity programme” or, in a rhetorical reversal, “loosen the purse strings” instead.
“While we will always put America’s interests first, we will get on with all other nations that want to get on with us. We’ll have great relationships, we will seek common ground not hostility, partnership not conflict”.
So Donald Trump during the small hours of Wednesday morning, as part of his acceptance speech. These emollient words, and the praise he heaped on Hillary Clinton after months of campaign-trail bile, changed the mood on global markets.
Having reduced interest rates over the summer, the Bank of England last week confirmed it’s no longer planning to cut again. That’s a good call, not least because the original shift down was anyway a mistake.
After rates were reduced from 0.5pc to a record low of 0.25pc in August, following the UK’s referendum to leave the European Union, Bank Governor Mark Carney indicated they could fall even further. The Monetary Policy Committee now admits the UK economy is significantly stronger than it had expected in the wake of the Brexit referendum. Ergo, such “forward guidance” of even lower rates has expired.
“Prefabs to solve housing crisis,” screamed a newspaper front page last weekend. Can the shortage of homes in Britain really be so bad that ministers are floating plans to encourage the first new generation of temporary, pre-packed houses since the great reconstruction drive which followed the Second World War?
The UK is in the midst of a housing shortage that numerous credible experts now describe as “chronic” and “acute”. While it’s widely recognized we need 250,000 new homes each year to meet population growth and household formation, house-building hasn’t reached that level since the late 1970s.
“Prefabs to solve housing crisis,” screamed the front page of The Sunday Telegraph last weekend. Can Britain’s housing crisis really so bad – that ministers are now floating plans to encourage the first new generation of temporary, pre-packed houses since the great reconstruction drive which followed the Second World War?
The UK is certainly in the midst of a housing shortage that numerous credible experts now describe as “chronic” and “acute”. While it’s widely recognised we need 250,000 new homes each year to meet population growth and household formation, house-building hasn’t reached that level since the late 1970s.
So, the UK is still growing quite well, despite the country voting to leave the European Union back in June. Our economy expanded, we learnt last week, by 0.5pc between July and September compared to the quarter before. That amounts to a buoyant 2.3pc annual growth rate. So does that mean everything in the UK garden is now rosy? And were Brexiteer-economists like me right? The answers are a definite “no”, and “maybe”.
What is now clear, and accepted by all but the most ardent anti-Brexit campaigners, is that the slew of pre-referendum scare stories warning of a “sudden and considerable fall” in economic activity if we backed Leave just over four months ago were nonsense.