Spring is here and the economic outlook for 2016 is beginning to take shape. Letitia Booty asks some leading banks and economists for their predictions for Q2 2016…
The world economy will grow more slowly this year than last
Stephen Boyle, chief economist, RBS “Spotlight and The Revenant scooped the pool at the Oscars but what about Dad’s Army?
“It’s Corporal Jones who should be our guiding light at the moment. A stalwart of the Walmington-on-Sea Home Guard and local butcher, his catchphrase was, “don’t panic!”
“Financial markets should have listened to him in the early weeks of the year as stock markets tumbled and investors got nervous about the prospects for global growth. Their concerns were rooted in China, where the economy is slowing and debts are mounting. Bizarrely, they were also concerned by falling oil prices, which are really like an enormous tax cut for most of the world that would boost spending.
“There is little doubt that the world economy will grow more slowly this year than last. However, the UK will stand apart from most of the rest. With employment continuing to grow and wages rising faster than prices, more people will have more to spend, boosting consumption. In the face of decent growth and the profitable opportunities it presents, businesses will continue to invest. Government is focused on fixing the public finances, will add little to demand, while export growth will be modest in the face as many of our overseas markets face their own challenges.
“Put all of this together and 2016 will be a 1-2% growth year. That’s a littler below average but better than most of our peers. And it’s a perfectly sound backdrop for doing business over the next few months.
“Ignore the doomsayers and don’t panic!”