In a far-reaching look at the global picture, delivered in the immediate wake of the UK's referendum on EU membership, Ian King emphasised the impact of referendum-related uncertainty on business investment, consumer demand and foreign direct investment.
20 September 2017
During an address to built environment leaders in June 2016, Ian King, Business Presenter for Sky News and business columnist for The Times, noted that the City of London accounted for 10% of the UK’s export earnings, and this would be put at risk outside the EU. Moreover, whether in the EU or outside, the UK had to address deeper structural issues such as low productivity, a housing crisis and the balance of payments deficit.
Beyond the UK, Ian looked at the challenges of high debt service ratios and persistently high levels of corporate, consumer and sovereign debt. The Eurozone would be challenged by countries potentially breaching the Stability and Growth Pact. Meanwhile, while there remained an acceptable surplus in global oil production, demand was increasing at an unsustainable 1 million bpd. The developed economies would also need to find ways to cover unfunded pension commitments and to address growing wealth inequality and low savings levels.
A new and highly significant development was the historically low rates of interest, which in some countries were now negative. Over USD 1 trillion of bonds worldwide now had negative yields, and at 1%, UK 10-year guilt yields had fallen to an unprecedented level.
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