Away in a Manger - Economics Weekly

Away in a Manger - Economics Weekly

A seasonal-themed update from RBS Economists, to the tune of Away in a Manger.

Economic Analysis

21 December 2015


The UK is completing                            
Its sixth year of growth                                   
With consumption the engine                  
That's contributed most                                      
Exports disappointed                                
Investment it grew                                            
While the fabled rebalancing                        
Failed to come through                                    
It's eighty-one months now                          
Since Bank Rate last changed                
Just half a per cent is                               
Where it has remained                          
Markets' expectations                              
Are for more of the same                          
But lower for longer                                
Is a credible claim.                         
While Britain's been growing                       
The euro zone lags                                            
With high unemployment                   
And huge fiscal drags                                  
It's hard to envisage                                  
Them turning it round                                   
When they don't have the freedom            
We enjoy with the pound.                             
The US has been growing
At a moderate pace
Unemployment has fallen
To its natural rate
The Fed has responded
By hiking its rates
It was neither too little
Nor was it too late.
For many a year, now
Growth of global demand
Has depended on China
And those Five Year Plans
Its modest consumption
And large capital stocks
Mean weak assets prices
And growth prospects blocked.
House prices continue
To rocket away
From most people's incomes
And from average pay
We all know the answer
To reversing this trend
But more liberal planning
Isn't everyone's friend.
Supply and demand lie
Behind the great tale
Of precipitous falls in
The price of oil
Shale costs are still falling
Consumption is weak
Good news for us buyers
For producers it's bleak.
We're looking ahead now
To the start of a year
We expect to deliver
Just a little less cheer
While things here at home
Look like much of the same
Conditions abroad
Will continue to wane.
Inflation will be muted
Unemployment will fall
Bank Rate will be stable
Shares are anyone's call
The public finances
Will continue to heal
Pay growth might prove fleeting
But growth will be real.

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