Charles Sylvester of Charles Stanley & Co: Political problems mount up for the markets
- Credit: Archant
Charles Sylvester of Charles Stanley & Co looks back at a better-than-expected 2017 – but says recent events have seen the euphoria fade.
It looked as though 2017 was the year that the world economy finally shook off its post-crisis hangover.
The latest figures show that it expanded by 3.8%, the fastest pace since 2011. However in the past month or so, the euphoria appears to have faded somewhat.
In April, the International Monetary Fund (IMF) acclaimed the recovery as being broad and strong whereas in the first quarter of this year growth actually slowed in all major economies; in fact in Japan, it even dipped below zero.
One of the main problems is Europe, or the Eurozone in particular. Until recently investors were worrying about political problems that never materialized, but ended up being surprised by the strength of economic growth. Now it would appear to be the opposite. Economically there have been very few surprises on the upside, while political problems appear to be mounting up.
Recent developments in Italy, the Eurozone’s third largest economy, are now the centre of attention, and affect confidence across the whole bloc.
The potential government’s policies are likely to bring them in direct conflict with the European Central Bank, and Germany in particular. However, their lavish spending plans, if they remain in the Euro, depend crucially on investors actually lending them the money.
- 1 How it unfolded, as Town pick up a 2-1 victory at Forest Green
- 2 Field fire breaks out in 27 acres of land in east Suffolk
- 3 Plans for 19 homes in Suffolk village refused
- 4 How the Ipswich Town players performed in their victory at Forest Green
- 5 Ipswich Witches ring the changes.... two riders out, two riders in
- 6 Top food event set to provide showcase for more than 100 Suffolk producers
- 7 Customers in for 'real treat' when pub reopens after two years
- 8 Forest Green Rovers 1-2 Ipswich Town: Super Blues win on the road
- 9 Teenager jailed for 10 years after blinding man in ammonia attack
- 10 Decision on pub's licence deferred to next week
Across the pond, President Trump has put the cat among the pigeons by initiating trade tariffs and threatening all-out trade war.
But with mid-term elections coming up, and markets not likely to react very favourably to an escalation on this front, we might see Trump pull back a wee bit from this sort of brinkmanship.