Making sense of our current economic landscape with Vistage Economist Roger Martin-Fagg 

This month’s update is in two sections; the first deals with the implications of the latest data. The second is optional reading and discusses what type of Brexit may take place given the political climate.

  • When will UK austerity end?
    The data tells us that the UK is a relatively low tax economy, with a small budget deficit (under 1% of GDP) and an ageing population which absorbs an increasing proportion of the national share. Assuming nominal GDP grows at 5% a year from now on, the government can grow its spend by the same amount without raising tax rates or its borrowing.
  • A brief economics lesson for those who think there is no money tree
    It isn’t the government, it is the UK commercial banking system. Commercial banks create new money out of thin air. Over 80% of this new money is mortgage finance. It is currently growing at 8% per annum and driving up real estate prices. Individuals who own property are benefitting from significant gains in unearned wealth.
  • House Prices & The Balance of Payments
    Real income growth in 2016 supported house price growth of 6% year on year this April. Real income growth today suggests house price growth of zero to 1%. I do not expect a price crash. For those of you who are sellers at the top end of the market (£2 million plus) you will need to take a sizeable hit if you want a sale (unless you took the advice of your agent and priced it correctly). 
  • May Forecast & The USA
    The first observation is that the Americans knew what they were doing when they set up their system of checks and balances on Presidential power. President Trump has not achieved much in policy terms but I still believe his style and approach continues to give US business confidence and from this flows new investment and growth.

If you are clear on what it is that makes your business distinctive and compelling then regardless of overall economic conditions you will thrive and in the event of a sharp slowdown or even a recession survive. You should only worry about the things you can fix.


Economic Update July 2017