UK business investment – ready for takeoff

28 October 2016|

As government ministers are fond of reminding us, the UK is set to be the fastest growing economy among the G7 in 2016. But there is another comparative statistic that is more damning. If we rank the G7 economies according to levels of non-housing investment as a share of GDP, the UK is bottom of the heap - a position it has occupied for the past 20 years. Those hoping for a government-led drive to raise the productive capacity of

When politics Trumps economics

13 October 2016|

Imagine a world in which Donald Trump is the President of the United States, and where he delivers much of what he has promised. The newly inaugurated President sets the ball rolling with a trade war, slapping import tariffs on Mexico and China. Foreign countries and US firms respond with lawsuits. Then a wall is built between Mexico and the US. Fearing the blocking of remittances, the neighbour to the south caves in and foots the bill. The US population

“What’s German for pot, kettle?”

7 October 2016|

Unless you have been living under a Brexit rock for the past few weeks, you are doubtless aware of the mess in which Deutsche Bank finds itself. Between mid-2007 and late last year, the price of Deutsche Bank shares fell around 75%, as low interest rates, tougher regulation and reduced revenue hit profitability hard. The price has fallen a further 50% since then. As if to add fuel to the fire(sale), the US Department of Justice announced that the German

Leading questions on Chinese growth

30 September 2016|

Every lawyer worth her salt knows there is a way of phrasing questions that creates a trap for the witness. Questions like: "Have you stopped fiddling your taxes?" are designed to preclude any non-incriminating answer. And questions like: "What was it that first attracted you to millionaire Paul Daniels?" are designed to undermine any answer that doesn't conform to the 'clue' that is in the question. It looks increasingly as though the survey that generates the official Chinese GDP data

Playing it safe

23 September 2016|

How much is a safe worth? Viewers of the hit television show Narcos might have asked themselves that question when Pablo Escobar, a Colombian drug lord, dug up a pile of money buried in the ground years earlier, only to discover that it was rotten and no longer fit for use. Central Bankers might be asking themselves that question too. After all, safe sales have soared in Germany and Japan, where central banks have adopted negative interest rate policies. If

The end of globalisation?

16 September 2016|

International trade is like bacon: you can never have too much of it. It is now almost 200 years since the British economist David Ricardo first wrote at length about the virtues of international trade. His Theory of Comparative Advantage explains why it is advantageous for a country to focus on making whatever goods or services it is best placed to make, and then to exchange those goods or services with other countries whose productive skills lie elsewhere. It has

Independence play

9 September 2016|

Data released this morning pointed to easing manufacturing and mining activity in South Africa, and erased hopes of a sustained bounceback following better-than-expected second quarter GDP figures. Africa’s most industrialised economy has long faced a range of economic ills, from low educational attainment and persistently high unemployment through to world-leading levels of inequality. Worryingly, economic performance is getting worse. Since the current President, Jacob Zuma, was elected to office in 2009, GDP growth has averaged 1.7% versus a 4.4% average

Statisticians who live in glass houses…

26 August 2016|

Last week it was reported that a delegation of EU statisticians is due to visit Dublin within the next few weeks to run a fine-tooth comb through Ireland's latest set of GDP statistics. As readers of Thank Fathom it's Friday will no doubt recall, government statisticians last month revised their estimate of growth in 2015 from an already impressive 7.8%, to a literally incredible 26.3%. Such a substantial change was bound to raise a few eyebrows. But if there is any

Trump versus Mexico

19 August 2016|

Mexico's IPC stock index has been among the world's best performing equity indices this month, up around 4% in local currency and 7% in US dollars. The Mexican peso has also been one of the world's best performing currencies in August. A risk-on mood among investors, higher commodity prices and a rally in emerging market assets more generally have helped. But Mexico has outperformed most other emerging markets and the reason for this seems to be the diminishing prospects of

Going for gold!

12 August 2016|

What determines a country's success at the Olympics? Demographics must play a part. The laws of probability tell us that people with the potential to be the best in the world, in any field of human endeavour, are more likely to be found in big countries than in small countries. But, from a selector's perspective, knowing that you have the natural talent is one thing - finding it, and nurturing it is something else entirely. That is why a country's