Philobiblon: The economics of 2006

Monday, January 02, 2006

The economics of 2006

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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