Like so many months in 2012, October could be described as a little challenging…
A week before America went to the polls Hurricane Sandy hit the North Eastern with devastating consequences. At home David Cameron’s brief period of respite at the Conservative party conference quickly faded as the Office for Budget Responsibility suggested that the austerity programme might have hindered Britain’s recovery. By the end of the month, the Prime Minister was once again battling Europe’s demand for more cash.
In Europe, the words “Spanish crisis deepens” were once again to the fore, whilst in the Far East, the Asian Development Bank slashed growth forecasts for the region.
What about the economy?
The economic news for the UK was mixed in October, with good and bad news seemingly alternating on a daily basis.
JJB Sports went into administration with the loss of 2,200 jobs whereas Aldi announced the creation of 4,500 jobs as the hard-pressed middle classes flocked to their door.
There were signs that UK consumer spending was finally picking up – particularly on winter clothing – and inflation fell to its lowest level for three years, at 2.2%. The unemployment figures for the three months to August also showed a fall – down by 50,000 to 2.53m. Then Ford announced the closure of factories in Southampton and Dagenham with the loss of 1,400 jobs – and possibly more in the supply chain.
In or out of recession??
Figures were released showing the UK was officially out of the double-dip recession. But many economists were sceptical, saying that the improvement the Government was claiming could all be down to one-off factors. The argument rumbled on…
Perhaps the most accurate barometer of the UK economy came from Greggs the Bakers. They warned of a slump in UK consumer spending, pointing out that lunchtime shoppers were switching to “significantly cheaper sandwiches.”
The FTSE-100 index was happy to go along with this sombre assessment, and ended the month a mere 41 points higher at 5,783.
And in Europe
October started with contradictory messages from two of Europe’s more troubled economies. The Greek Prime Minister warned that without a re- negotiation of the bailout package, the country couldn’t manage “beyond the end of next month” – which is now this month. But speaking at the LSE, the Spanish economy minister, Luis de Guindos, flatly refuted the idea that Spain would need a bailout. Despite unemployment in Spain being a staggering 25%.
The larger European stock markets reacted to all this excitement with Gallic indifference. The German DAX index and the French index were up ever so slightly. The Greek stock market turned in a spectacular performance, rising by over 10% in the month, but it would be a brave man that invests there at the moment.
Check out our other blog to see what’s been happening in the US.
Despite the fact that so many countries, companies and individuals around the world are struggling, McClaren Automotive – the ‘normal car’ branch of the F1 team – unveiled their new P1 Supercar. Most of the publicity apparently featured Lewis Hamilton, who then unfortunately defected to Mercedes. Nevertheless the launch of the P1 went ahead and despite global economic problems there is apparently no shortage of customers ready and willing to stump up the £800,000 needed to put a P1 on their drive. Rest assured that the author of this newsletter is not one of them and will be pedalling back to his desk to keep working away…