The global financial crisis of 2008 brought with it a structural shock to labour productivity across the world, but since the crisis, US and UK labour productivity have trended very differently. US labour productivity started to return to its pre-crisis (1991–2007) trend, whereas UK labour productivity growth has flat-lined and diverged strongly from its pre-crisis trend. There are many reasons for this, including the competitiveness of their respective domestic industries, the size of the market that these industries have access to, and electricity price differential; but one reason is certainly the more cautious approach to investment taken by the UK’s

Having won a landslide victory in last week’s general election, the UK’s new Labour government now faces the challenge of resurrecting an economy that has been plagued by a poor trend rate of growth over the past few years. A large part of the country’s poor economic performance can be attributed to persistently weak investment, especially since the 2016 Brexit referendum. Indeed, Fathom calculations suggest that, had investment followed its pre-referendum trend, it would be around 15% higher than it currently is. Refresh this chart in your browser | Edit the chart in Datastream Ironically for a centre-left political party, many of

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

According to Fathom’s Global Outlook, Spring 2024, advanced economies will avoid recession over the forecast horizon (which goes up to the end of 2026), with the global economy showing resilience against inflation and high interest rates. There has however been a divergence in the performance of major advanced economies, which Fathom expects to continue. Looking at growth in real GDP, the US has outperformed both the euro area and the UK, with positive growth recorded in each quarter since 2022 Q3. The euro area and the UK experienced slightly negative growth in 2023 Q3 and Q4. According to the conventional

Every market participant in the European ETF industry knows that Europe or even the EU are far away from a single market when it comes to ETF trading. Respectively, many ETF promoters list their ETFs on different exchanges to reach as many investors as possible. What sounds like a very appropriate approach to maximize the opportunities for ETF distribution also has some negative effects. Since the ETF promoters have to pay fees and expenses for any exchange listing, this means that the ETF promoters needs at least some trading volume in a given ETF on the respective exchange to cover

On January 30, 2024, the HM Treasury has confirmed that European Economic Area (EEA) states will be considered as “equivalent” under the new Overseas Fund Regime (OFR) for UCITS, excluding money market funds. The OFR is expected to be rolled out in April 2024 to replace the Temporary Marketing Permission Regime (TMPR) within a prolonged transition period until December 2026 to smoothen the transition. The new OFR shall remove post-Brexit barriers for newly launched EU-domiciled funds and ETFs to enter the U.K. market when the products meet the necessary retail disclosure requirements. Even further, the U.K. government does not intend

Is the end of policy hikes around the corner? Potentially, yes, after this week’s rate-setting meetings by two of the largest central banks, the Federal Reserve and the Bank of England. In its meeting on 20 September, the Fed’s Federal Open Market Committee agreed to keep the federal funds rate unchanged in the range of 5.25% to 5.5%. A day later, and following an inflation release that surprised to the downside, the Bank of England’s Monetary Policy Committee too decided to stall its key policy rate, at 5.25%. Refresh this chart in your browser | Edit the chart in Datastream The Fed’s

The uncertainty over the future of the US debt ceiling and the risk of a US default have caused the US sovereign one-year CDS spread, an indicator of sovereign credit risk, to soar in the last few months. The spread peaked at 152 on 2 May, the highest it has ever been. The spread remained high until it became clear that a deal would be struck, after which it dropped by 90 basis points between 30 May and 1 June. Standoffs are not new: the debt ceiling issue has been used both by the Republican and Democratic side in the

Headline UK inflation fell sharply in April to 8.7%, down from 10.1% in March, hitting single figures for the first time since August 2022. However, the drop in the headline rate provided little cause for celebration. Most of the fall can be attributed to base effects from last year, when gas and electricity prices soared as a consequence of the war in Ukraine. Especially worrying are food prices, which continue to rise at record highs, while services inflation remains very sticky, sparking fears that price pressures could continue in the near-term. April’s headline figures were disappointing both for the Bank

On April 20, 2023, Refinitiv Lipper unveiled the results of the Refinitiv Lipper Fund Awards for the United Kindgom in conjunction with our long-term media partner Portfolio Adviser. Unlike the last two years, the ceremony was held as an in-person event Banking Hall in London. The event also marked the fiftieth anniversary of Lipper, since the company was founded in 1973. The awards are based on the Lipper Leader rating for Consistent Return. These ratings are calculated using a utility function based on the effective return over multiple non-overlapping periods—within the respective three-, five-, and 10-year horizons, based on Lipper’s

Britain has just celebrated Guy Fawkes Night, remembering the time that a group of plotters including Mr Fawkes hatched a plot to destroy and rebuild the way government was done. For a few weeks earlier this Autumn, another group of plotters briefly took the reins of power in the UK and attempted to redraw economic policy. The attempt was short-lived, and the ousting of the plotters was ignominious and memorable, if (thankfully) less violent than the end of Guy Fawkes. Some damage had already been done, with markets pricing a ‘moron risk premium’ into sterling-denominated assets during the brief Truss

UK mortgage lenders began withdrawing their products from the market last week, as the effects of Chancellor Kwasi Kwarteng’s ‘mini-budget’ on Friday 23 September were felt across the economy. 935 mortgage products were pulled last Tuesday, according to Moneyfacts, surpassing the previous daily record of 462 which occurred at the onset of the COVID-19 pandemic. The £45 billion worth of debt-funded tax cuts announced by Mr Kwarteng had unsettled the financial markets, and caused the cost of lending to UK institutions to rise. Banks and building societies price their mortgages in advance, so banks were at risk of putting out