Anatole Kaletsky is always worth reading (even if he always delivers his copy 10 minutes after the absolute, final deadline) – here’s his take on the economics of 2006.
Combining these three negative factors, a significant global slowdown in the year ahead seems almost certain. But a mid-cycle slowdown is very different from a late-cycle downturn of the kind that presages outright recession. In the case of Britain, which was the first of the major economies to tighten monetary policy and experience a slowdown, the worst may already be over. Assuming the Bank of England reduces base rates to around 4 per cent by late summer, I would expect a return to trend growth of around 2.5 per cent and a stable housing market this year.
So not too bad for the UK, but I’d be more worried in the US – which matches my entirely lay view – those deficits have got to bite at some time.
Unfortunately, however, for the environment it is almost certain to be another bad year. Today’s news: fires and record temperatures in Sydney, and the biggest whale slaughter in a generation.
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