The Bank of England left interest rates unchanged at 0.25% and slashed growth forecasts as uncertainty over Brexit weighs on the UK economy. Projected growth for 2017 was cut from 1.9% to 1.7%, and for 2018 from 1.7% to 1.6%. The pound fell over 1% against the euro following the announcement. Bank Governor, Mark Carney indicated that some tightening of monetary policy would be required in the next three years but provided little further detail.
(Not so) Super Thursday
The world’s smallest violins were playing this week for the chief executives of FTSE 100 companies. The embattled executives saw their average pay packets fall 17% from £5.4m in 2015 to £4.5m last year, following political pressure and hostile public opinion. Figures from the Chartered Institute of Personnel and Development and the High Pay Centre also showed that the ratio of pay between CEOs and their workforces fell from 148:1 to 129:1. A move in the right direction, perhaps – but it still means the average employee would have to work 129 years to earn his boss’s annual salary. The report comes as Theresa May’s government releases its responsible business reforms next month, which aim to “enhance the public’s trust and confidence in big business”.
The FTSE index of 100 leading UK companies was up 1.6% over the week to Thursday’s close.
Eurozone has cause for celebration
Europhiles have had a pretty good 2017 so far. The election of French President Emmanuel Macron and pro-European politicians in the Netherlands and Austria were watershed moments. There was further cause for cheer this week with the news that the Eurozone grew at its fastest pace in five years. The pace of growth in the 19-country bloc accelerated by 0.6% year-on-year in the three months to June. The IHS Markit’s purchasing managers’ index also shows strong job creation in the Eurozone’s manufacturing sector. The weak euro and subdued inflation has helped Eurozone exports in a global economy that has remained buoyant.
In other positive news, a survey carried out for the European Commission found 73% of Eurozone citizens supported membership of the single currency area, its highest level of popularity since 2004. The figures illustrate that belief in the European project remains strong in the face of Brexit, the debt crisis and concerns over migration.
The positive news, combined with US dollar weakness caused by President Trump’s political woes and slower-than-expected pace of Federal Reserve interest rate hikes, boosted the euro against the dollar to its highest level in two and a half years. The Euro Stoxx index of 50 leading companies was flat over the week.
Mooch gets the boot
A reality show that judges the skills of a motley crew of contenders, with one contestant eliminated every week. No, not The Apprentice. Welcome to the Oval Office in 2017. The latest man in the firing line is Anthony Scaramucci (the Mooch, or Trump’s ‘Mini Me’, as some have called him). He had an inauspicious start as the White House Communications Director when he used a telephone conversation with a journalist to launch an expletive-ridden tirade against former Chief of Staff, Reince Priebus and Trump’s Chief Strategist, Steve Bannon. And in a BBC interview, he articulated his colourful views on the virtues of ‘frontstabbing’ and cheeseburgers. But after just 10 days the Mooch was out of a job, a move many believe was masterminded by John Kelly, Trump’s new Chief of Staff.
In market news, the Dow Jones Industrial Average (DJIA) soared above 22,000 for the first time ever following strong second quarter results from Apple. While the S&P index of 500 leading US stocks is considered a more accurate measure of the US corporate landscape, the rise of the DJIA does suggest that US companies are in good health.
Optimism in emerging markets
Consumer confidence across 25 emerging markets has risen to its highest level since 1993, according to Pictet Asset Management. Its monthly ‘Emerging Markets Monitor’ has shown strong improvement since the beginning of the year – largely driven by Brazil and Russia, two countries that are recovering from deep recessions. China’s reading also saw a year-on-year increase. Much of central and Eastern Europe has also seen confidence reach new highs wage rises and falling unemployment.
Staff at Cardiff’s City Arms pub had to confess to a bit of a clerical error this week. The befuddled bartenders asked a group of seven priests to leave the establishment, having mistaken them for a stag party in fancy dress. Having been unfairly collared, the seven seminarians, who had been celebrating an ordination, were about to depart when the pub’s landlord finally saw the light. They were welcomed back into the fold with a free round of drinks, a favour they returned by buying pints of ‘Reverend James’ beer for themselves and the barman. When they finally left, we’re fairly sure that none of them uttered a line about it being “pastor bedtimes, lads”.
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