Knowledge and insight

A logjam in the streets and another in Parliament. Our chief investment officer, Julian Chillingworth, ponders a hectic week ahead.

Unfortunately for us, this decimation in the standard of living is unique to the UK. Not only have real wages struggled since 2008, we now have the poorest rate of social mobility of any advanced major economy. Our future is uncertain, and that can’t just be blamed on Brexit. Edward Smith, Rathbones’ head of asset allocation research, discussed his concerns about our small but troubled economy and considered our future at our annual investment conference. 

“It’s just a flesh wound.”

In some ways, retail is going through a similar transformation to that of the auto industry, when greater automation and systems seeped into manufacturing decades ago. Nowadays, retail shopping is less about swamping high streets with clothes or sofas in every size and colour. Far better to save your property budget for creating a huge and efficient logistics network to deliver what consumers want, to their door, overnight. In this just-in-time environment, quality data is pivotal. But, very few companies have it, and they tend to reside in Silicon Valley.

You could hear the crack of the starting gun echoing around the markets last week: the race for the 2020 Democratic presidential candidacy is on and American equities dipped noticeably. And the leading message from those leading the Democratic pack is that capitalism itself is broken and needs radical reform.

Want to measure the pulse of the global economy? Ask Dr Copper, or so the adage goes. Copper is all around us. You need it to build a house, a car and a hairdryer. The red metal is even one of the most intensively used raw materials in the green energy revolution — more electrical motors, more battery packs (but fewer internal combustion engines) means more copper wiring. So demand for copper ebbs and flows with the ups and downs of the business cycle. 

Britain is a small, open economy. ‘Small’ may sound a bit strange when by GDP, the UK is the fifth-largest country in the world. But, in fact, we only contribute 2% of global GDP, which means that we aren’t big enough to unilaterally influence global prices, interest rates, or the global economy at all. We are a small economy and we have some big problems, but a Brexit wobble won’t derail the whole global economy.

We don’t know about you, but over the past year or so we got into the habit of buying our travel money extremely far in advance of holidays.

Soon after the referendum result of 2016 – when sterling fell like an elephant with a ball and chain on its leg – there was a period when you held off because you thought the exchange rate could possibly, maybe, should be, better next week. That time of timid hope bled away when the pound slipped below €1.15 and camped out for more than a year.

Productivity growth is falling around the world, but the slowdown is more acute in the UK. This deceleration could be lessened – and even reversed – by investment in research and development (R&D), which kickstarts new technologies and, ultimately, increases growth and productivity. However, the UK’s spending in this area is falling behind other developed economies at a time when we need to be leading the way.