As voters in three of the G7 economies go to the polls this year, investors appear more optimistic about the outlook for the US economy than that of France or the UK, judging by the performance of equity markets in the three countries since Rishi Sunak called the UK election. The relative strength of the US economy and the country’s status as the issuer of the world’s major reserve currency help explain this outperformance. Investors have taken fright at the unfunded spending plans of the left and right in France, who both won more votes than Emmanuel Macron’s centrist party

South Africa held elections last month in which the ruling ANC’s grip on power was broken for the first time in 30 years. Voters will be hoping that the new, coalition government – which includes the ANC and its long-time rivals, the Democratic Alliance, plus some other parties – can reverse the country’s long period of economic stagnation. In PPP-adjusted international dollars, South Africa’s GDP per capita is lower now in real terms that it was in 2008; and it has been overtaken by China, while India is catching up. Refresh this chart in your browser | Edit the chart in Datastream

Polling data from RealClear Polling, which takes an average from multiple polls across the US (and which is available to view through LSEG’s Datastream platform), shows that Trump is leading the race to win the election. The gap between Trump and Biden widened at the beginning of the year, but shifted towards a closer tie in April (and is now widening again) — suggesting a tight race. This leaves the question of whether economics swing things in Biden’s favour… Refresh this chart in your browser | Edit the chart in Datastream A paper by Kahane (2009) has attempted to model the effects

Turkey’s ruling Justice and Development party (AKP), led by President Recep Tayyip Erdoğan, suffered a blow in local elections, with early results pointing to the loss of mayoralties in the country’s two largest cities, Ankara and Istanbul. The incumbent party went into the elections vulnerable due to a weak economic backdrop, with annual GDP growth in negative territory and both inflation and unemployment elevated. Indeed, Turkey’s ‘misery index’, which adds together headline CPI inflation and the unemployment rate, has risen sharply higher over the past year or so. Since 2005, this measure of household wellbeing has averaged less than 20%.

On Sunday 4 March, Italians voted in a general election to decide the composition of both houses of the national parliament. The vote came against a backdrop of disillusionment with the status quo in Italian politics and the results showed a surge in support for anti-establishment parties such as the Five Star Movement and the Northern League. Despite economic growth firming last year, Italy’s expansion remains slow relative to its European peers and unemployment is still elevated. Furthermore, the fruits of the economic recovery have not been evenly shared, with unemployment in the south remaining well above the national average.

In some parts of the financial market, it’s as if the euro zone debt crisis never happened. The gap between benchmark French and German bond yields this week shrank to its smallest since 2009, before the countries that share the single currency were hit by financial shocks that threatened monetary union itself. Such indiscrimination is premature, and stores up fresh problems. French 10-year government bond yields on Monday and Tuesday were only 15 basis points higher than their German counterparts. That spread was more than five times as wide in February, when concern was rife that anti-euro far-right leader Marine

As the days shorten, the promise of the European spring is being replaced by a darker mood in European politics. This year has delivered a series of polls seen as essential to the future of the European Union, and started with promising early signs for Europe’s centre ground. In March, the Liberal party was re-elected in the Netherlands, thwarting the populist Party for Freedom (see Fathom Consulting, ‘Dutch election outcome represents a step away from our risk scenario’). Subsequently in May, Emmanuel Macron’s centrist election campaign overcame the far-right National Front candidate Marine Le Pen (see Fathom Consulting, ‘Labour market

Britain’s messy politics is making it harder for Bank of England Governor Mark Carney to ignore a jump in inflation. The spike in prices is probably temporary and wages remain subdued. But the country’s fragile government will add to bond investors’ nerves. Carney and his fellow rate-setters are keeping UK policy rates at a record low of 0.25 percent even though prices rose 2.9 percent in May – the highest level in nearly four years and almost a full percentage point above the central bank’s target. That makes sense. While sterling’s weakness after last year’s EU referendum has made imported

On Tuesday 9 May, we presented an overview of our Global Economic and Markets Outlook for 2017 Q2 at an event hosted by Thomson Reuters in London. We were joined by former Bank of England policymakers Paul Fisher, Ian Plenderleith and Sushil Wadhwani. Fathom Director Erik Britton began by setting out what, in our judgment, is the most likely outcome for the global economy. Despite wobbles over his initial failure to replace Obamacare, our central scenario sees US President Donald Trump enact a substantial fiscal stimulus package. There is a material pick-up in growth, with the US economy expanding by

When to Dump the Trump Bump? While US equity prices have declined over the past week, they are still up more than 10% since Trump was elected President. On the eve of the election the stock market was virtually flat from a year earlier and economic performance has not radically changed so conventional wisdom is that most of the post-election bump in equity prices reflects expectations that President Trump’s policies will be good for economic performance and corporate profitability. Indeed, the SPX price earnings (P/E) ratio is up by about the same amount as the market so the rally apparently