The first four weeks of 2018 are behind us: this time next week it is February. So what happened around the world in January? To start the week we take a look back at the major economic events of January – a month that saw the collapse of Carillion in the UK, the World Economic Forum in Davos, and the ‘Nutella riots’ in France…
This time last week we were giving you a preview of the World Economic Forum – the annual meeting of world economic and political leaders in the Swiss resort of Davos. The great and the good duly helicoptered in made their speeches, pressed the flesh and helicoptered out. Donald Trump’s speech was received well, Theresa May’s speech was ridiculed – not least by the Conservative press at home – and the Shadow Chancellor railed against the evils of capitalism whilst staying in a €800 a night hotel.
But Davos was all talk – what has happened in the real world so far this year? The one where you and I go to work, pay our mortgages or our rent and generally wonder why there is so much month left at the end of the money…
Carillion went bust
The big business story in the UK in the first month of the year was the collapse of the government’s ‘go-to’ contractor Carillion. The company went under with debts of £1.5bn and a hole in the pension fund of at least £600m as Government ministers continued to dole out contracts even after three profit warnings. Up to 30,000 small businesses are owed money by Carillion and the receivers have told them to expect less than 1p in the pound on the money owed. There are bound to be redundancies and companies going out of business: equally worrying is the total lack of business acumen shown by Her Majesty’s Government.
Despite Carillion, the UK is doing reasonably well
January started with all the retailers reporting on their Christmas trading figures: Next, Aldi and Lidl did well but Debenhams reported disappointing figures and – having feasted on Carillion – the vultures are now circling the high street chain.
But UK manufacturing was at its highest for ten years, the pound rose above $1.40 for the first time since the Brexit referendum and the FTSE100 index of leading shares rose to a record level – which is good news for anyone whose pension is linked to the stock market.
UK growth for the last quarter of 2016 was revised upwards to 0.5% – still way behind the growth rate in China – but an encouraging sign nevertheless, and inflation dipped slightly to 3%.
If you are looking for clouds on the horizon then the oil price hit a four year high of $70 a barrel – so petrol will not be coming down in price anytime soon – and mortgage approvals slipped to their lowest level for five years.
What happened in the rest of the world?
Well, Donald Trump declared that he was a ‘stable genius’ – whether that is good news or bad I will leave you to judge. However much of the US seemed to take a different view as the book Fire and Fury – tales of epic incompetence in the Trump White House – rocketed to the top of the bestseller charts.
Also ‘rocketing’ was the Dow Jones index which broke through the 25,000 barrier for the first time: whatever the rest of the world thinks, the US stock market loves its President.
….to President of the United States (on my first try). I think that would qualify as not smart, but genius….and a very stable genius at that!
— Donald J. Trump (@realDonaldTrump) January 6, 2018
Less impressive was the US Government running out of money for a few days as Congress failed to agree on the bill to fund the federal government until 16th February. This is now a regular occurrence in the US, with the last government shutdown happening in 2013 and lasting for 16 days.
Across the world in North Korea Kim Jong-un welcomed in the New Year by saying that “the nuclear button is always on my desk.” Perhaps we can look forward to some peace and quiet in February as Kim’s finger strays from the nuclear button to the remote control to see how the North Korean team of 22 athletes is doing at the Winter Olympics…
The real story in the Far East, though, continues to be China’s economic expansion, with figures confirming a growth rate of 6.9% for 2017.
Back in Europe – where growth rates of 6.9% cannot even be dreamed of – German Chancellor Angela Merkel edged closer to a coalition with the Social Democrats and another four years in power and de facto leader of Europe.
We have written about the crypto-currency Bitcoin many times over recent months. This time last year it was hovering around the $1,000 mark before rising rapidly through 2017 to almost touch $20,000. January was not a great month for Bitcoin as South Korea banned trading in the ‘currency’ and the price slipped to – at the time of writing – just over $11,000 (£7,780). There are plenty of experts prepared to tell you that Bitcoin will slide, crash or implode this year: nevertheless, the search term ‘buy Bitcoin’ is three times more popular than ‘buy gold.’
Things are bad in France…
Whatever problems you think Donald Trump or Theresa May have, spare a thought for Emmanuel Macron, President of France, where food riots have broken out over that famous French delicacy, Nutella…
An essential part of the French breakfast – if the exchange students that stayed with us were any guide – a jar of Nutella normally sells for around €4.50 (£3.90). Last week supermarket group Intermarché slashed the price to just €1.40 and chaos duly broke out. The jostling turned into outright fighting as shoppers battled one another for jars of the chocolate spread. Inspector Clouseau was quickly on the scene amid reports in one supermarket that a woman had her hair pulled while another sustained a cut hand. “They were like animals,” one traumatised shopper told the French media.
— Evan Kirstel (@evankirstel) January 28, 2018
On our side of the Channel, the normal British stiff upper lip prevailed – except for Devon butcher Chris McCabe, who sadly had a frozen upper lip as he found himself locked in his own walk-in freezer at temperatures of -20C. Fearing he only had an hour to live he managed to hammer his way to safety with a frozen black pudding. With the beef too slippery and the lamb too big, the black pudding was, according to our clear winner of the ‘Man of the Month’ title, the nearest thing he could find to a police battering ram…