Should we be concerned about the economic downturn in Ireland?
Yesterday's news that the Irish economy, measured by gross domestic product, fell by 1.2% in the second quarter of 2010 shocked many investors. Even though it was common knowledge that the Irish economy was struggling, due to the property sector and financial sector crashes, nobody quite expected a return to a shrinking economy so soon. So should we be concerned about the economic future of Ireland?
While there is obvious cause for concern, with news about the economy shrunk in the second quarter of 2010, it is too soon to call an inevitable double dip recession in Ireland. However, there are other economies within Europe that are also struggling and if one were to collapse, and there is no certainty this will be Ireland, then we could see others fall in a domino effect. As a consequence the EU/IMF will be looking to move in quickly if the Irish economy does downturn further and the real risk of a double dip recession becomes relevant.
Interestingly, national debt as a percentage of Gross Domestic Product in Ireland is less than that of the UK and some other European countries but it is the weakness in the financial sector which is perhaps the main reason for the concerns.
UK Interest Rates Expected To Remain At 5%
The puzzle which is the future direction of UK interest rates is unlikely to become any clearer when the Bank of England meet later this month. A recent poll of 71 analysts saw a resounding 69 voice the opinion that rates will remain unchanged this month, with only 2 expecting a reduction in the headline rate. The main problem seems to be the continuing rise in inflation which is nudging towards...Read More
Will the euro survive financial difficulties in the euro zone?
There is no doubt that the ongoing financial difficulties in Spain, Portugal and Greece are impacting upon the reputation and investment profile of the euro. While there are suggestions that the short-term fall in the value of the euro, against the dollar in particular, could slow as "short" positions are closed many feel that the end of the fall is not yet in sight. So what can the European Union...Read More
£20 billion and counting!
The Bank of England has injected another £20 billion into the ailing UK money markets as yet more doom and gloom descends upon the Square Mile. News from the States would indicate that AIG (the largest insurance company in the world) has only 24 hours to sort itself out and stave of bankruptcy. This for a company with investment assets totalling over $1 trillion is truly breath taking and many...Read More
Will unemployment peak at 2.8 million?
The Chartered Institute of Personnel and Development (CIPD) have today issued a revised forecast regarding unemployment in UK with a suggestion it could peek at 2.8 million in 2010. While an increase from the current 2.5 million to 2.8 million would obviously be unwelcome, it is a sharp reduction in the Institute's initial forecast of 3.2 million peak. So is the UK economy recovering quicker than...Read More
Is the Scottish economy set for a fall?
While it has passed over the heads of many financial commentators, the demise of HBOS and RBS have one thing in common, a Scottish edge. For many years Bank of Scotland and Royal Bank of Scotland were the figureheads of the Scottish economy, the world leaders in their fields, but look at them now. Tired, under funded and in serious danger of going out of business without third party assistance....Read More