Boom or bust – the signs are often contradictory and not always easy for the man in the street to interpret!
In mid-January the FT reported “The UK economy shrank for the first time in six months in November and risks entering a double-dip recession… Output was 8.5 per cent lower than in February, before the UK’s first lockdown, suggesting the economy faces a long road to a full recovery.”
But by late March the FT was reporting holders of UK government bonds are suffering the worst quarter in at least two decades as Britain’s economic prospects brighten…
So is inflation on its way?
Bill Bonner, writing in MoneyWeek certainly thinks so. “A flood of free money loosens the moorings of a society” he says, quoting the Biden administration’s intention to spend a further $3trn it doesn’t have on infrastructure, in addition to the $1.9trn it didn’t have.
Global bond markets have struggled broadly in the first three months of 2021, with US Treasuries at the centre of the market storm. The FT on 3 April points out the benchmark US 10year Treasury Note, having hovered around .9% in early January now trades around 1.7%.
UK employment rate:
aged 16+ seasonally adjusted
1.1 pp on previous years
UK employment figures:
– 1.5% on previous figures
Quarter on quarter
0ct – Dec 2020
CPHI 12-month rate
-0.2pp on previous month
At April 1, 2021
First dose total
Second dose total
One thing is sure: no-one knows what the economic future holds and the past is not proving a good guide. Pundits feel that America, which spent less per capita saving the people from poverty, is likely to be the fastest growing economy this year; in the fourth quarter last year its growth rate was 4.1%–China had dropped back to 6%. Britain spent more than almost any other country providing comfort and support to businesses, has a steeper hill to climb but its successful vaccination programme means it is climbing back faster than many other countries. Latest forecasts say that all adults will have had their second shot by July.
As we write, the developed world is scrapping over vaccine stocks. The EU, eager to punish Britain for leaving and feeling hard done by by its lack of vaccination success, is threating to cut off supplies to anyone outside its borders. The World Health Organization is promoting its global COVAX scheme, while much of the third world is happily being jabbed with Sinovac, reporting no side effects and much joy at being able to emerge, vaccine passport in hand, from lockdo
Many countries are announcing a spring spike in Covid cases, whereas last year warmer, sunnier days resulted in a fall-off. The South African mutant, the beastly Brazilian and now the double-headed Indian one all threaten a return to normality, whatever that means now.
The BBC reported that a new “double mutant” variant of the coronavirus has been detected from samples collected in India. Officials are checking if the variant, where two mutations come together in the same virus, may be more infectious or less affected by vaccines. Some 10,787 samples from 18 Indian states also showed up 771 cases of known variants – 736 of the UK, 34 of the South African and one Brazilian one.
Whether you are a Polyanna or a Cassandra, whether inflation is the tiger that roars or merely a chimera, it has never been more important for your business to have accurate budgets and to be able to manipulate them nimbly to accommodate sudden shifts in the business environment. Fast, flexible forecasting the Forecast 5 way is the key to avoiding the final point in the table below.
This week the Office of National Statistics published the following overview of UK business:
If your business was in the final 3%, our deepest sympathies. It is likely that this figure will increase once the furlough payments cease and we are all affected by such closures.