For example, inflation is falling, and many analysts believe central banks around the world will start cutting interest rates in the near future.
However, recent attacks by Houthi rebels in Yemen on ships passing through the Red Sea – a vital trade route – means there is a risk of inflation going up again.
As always, let’s take a closer at what’s going on in key markets worldwide.
The UK economy grew by 0.3% in November, according to the Office for National Statistics, partly due to a rebound in the services sector and Black Friday spending. But despite this growth, which came after a fall in GDP during the previous month, many economists still believe the risk of recession remains.
The International Monetary Fund (IMF) expects to see sluggish growth of just 0.6% this year, which will be the second slowest growth in the G7, behind Germany. The organisation has also downgraded its growth forecasts for 2025 from 2% to 1.6%.
Inflation, meanwhile, remains well above the Bank of England’s target of 2%, climbing to 4% in the year to December. Economists had been expecting it to fall from 3.9% in November to 3.7%, so the surprise increase proved a sobering reminder that the inflation crisis is far from over.
According to the Office for National Statistics (ONS), this unexpected increase in prices was driven largely by tobacco and alcohol price rises. Despite this upturn in inflation, many analysts remain confident that interest rates will be cut at some point this year.
Official figures also revealed that pay growth, excluding bonuses, fell from 7.3% to 6.6% in the three months to November. In addition, the estimated number of vacancies in the UK fell by 49,000 to 934,000 between October and December.
Sluggish growth and mixed economic data are a less than ideal backdrop for the government as the general election moves ever closer, particularly as there are calls from some quarters for tax cuts.
Chancellor of the Exchequer Jeremy Hunt has hinted that he might cut taxes in the Spring Budget in March. However, the Institute for Fiscal Studies (IFS) has warned that “tax cuts today add to the risk of tax rises or spending cuts tomorrow”, due to the current economic climate. “The parties must be honest with the public about the tough trade-offs they will inevitably have to make on tax and spending,” the organisation said.
However, Capital Economics is more confident about the prospect of tax cuts, since government borrowing in December 2023 was £8.4bn less than a year earlier, and the lowest figure for the month since 2019. In addition, interest payments on government debt fell by £14.1bn to £4bn. Ruth Gregory, deputy chief UK economist at Capital Economics, believes this gives Mr Hunt “a bit more wiggle room for a big pre-election splash” in the Spring Budget.
One positive bit of news for policymakers and businesses alike is the finding in GFK’s latest Consumer Confidence Barometer that consumer confidence went up in January. Although it is still in negative territory at -19, it is the highest score in two years. Meanwhile, people’s view of their own financial situation rose to zero – the first time it has been out of negative figures in 24 months.
This is reflected in the latest trading figures for several major retailers. Tesco, for example, saw UK sales rise by 6.8% over the six weeks to January 6th, while M&S reported an 8.1% increase in sales over the 13 weeks to December 30th.
January also saw news that Tata Steel plans to reduce the size of its UK workforce by 2,800 and close both blast furnaces in Port Talbot. Tata Steel has stated that the job losses are necessary as it switches towards low-carbon steelmaking, while Prime Minister Rishi Sunak has insisted that the government is “absolutely committed to steelmaking in the UK”.
Meanwhile, the Competition and Markets Authority has confirmed it is to investigate the proposed merger between Vodafone and Three. The watchdog will look at whether the deal, which would create the biggest mobile network in the UK, could reduce choice for consumers and push up prices.
January saw the fourth anniversary of the UK’s departure from the European Union, but Brexit still remains prominent in the headlines.
Negotiations between the UK and Canada on a post-Brexit trade deal broke down last month, as Canada was pushing for the UK to ease a ban on hormone-treated beef. The UK, meanwhile, has expressed concerns about the import taxes that Canada has placed on British cheese. Nevertheless, the British government has said it is “open to restarting talks with Canada in the future”.
New post-Brexit controls on food, plant and animal imports to Britain from the EU have also finally come into force. This means health certificates will be required on goods coming from the EU, including meat, fruit, vegetables and cut flowers. The new rules have led to widespread criticism from various industry bodies, who are warning that it will create delays in the supply chain and drive up prices for businesses.
The pound ended January up 0.20% against the dollar, and on the financial markets, the FTSE-100 Index ended the month at 7,651 points, down 1.05% on December.
The European Central Bank held interest rates at 4% in January, and stated that it would be willing to keep them high for long enough to bring inflation down from 2.9% to 2%. Christine Lagarde, the President of the European Central Bank, said “the disinflation process is at work”, but stressed there are upside risks to inflation right now.
In particular, she said the ECB is keeping a close eye on supply chain disruption being caused by the ongoing crisis in the Middle East, as shipping costs and delivery delays are both increasing.
Meanwhile, S&P Global’s flash eurozone composite purchasing managers’ index suggests that the eurozone economy is seeing signs of tentative recovery. The index rose to a six-month high in January, after declines in the services industry were offset by an upturn in manufacturing, although business activity is still contracting. This contraction was driven by a relatively deep downturn in business activity in France and Germany, which performed worse than the rest of the eurozone.
Germany’s economy has been struggling for some time, with its gross domestic product falling by 0.3% in 2023. This was reflected in business sentiment, as the Ifo Institute reported a drop in morale among German business leaders in January. “The German economy is stuck in recession,” said Clemens Fuest, President of Ifo.
One factor that could potentially put the brakes on the economy, at least in the short-term, is industrial action in the transport sector. Last month saw train drivers in Germany stage a six-day strike, with both passenger and goods trains being affected by the disruption.
The GDL rail driver’s union has been in dispute with the state-owned Deutsche Bahn over pay and is calling for higher wages to compensate for increases in inflation.
Meanwhile, the European Commission is seeking to bolster the EU’s economic security by taking steps to limit the influence of China. The Economic Security Package has been proposed in order to give Brussels greater oversight over foreign direct investment in the bloc, as well as investments overseas by European businesses.
In the tech sector, video games developer Epic Games looks set to benefit from a new EU law designed to increase competition. At the moment, iPhone users can only download apps from Apple’s app store, but under the new rules, Apple must allow its customers to access other app stores on iOS devices purchased in the EU. The change in the law, which comes into force in March, means Epic’s popular video game Fortnite will be available to iPhone users once again after a four-year absence.
Elsewhere in the technology sector, the BBC reports that the EU’s competition watchdog is to block Amazon’s takeover of vacuum cleaner maker iRobot, after being given the green light by regulators in the UK.
Influencer marketing has been one area where regulators across Europe have been seeking to tighten the rules, and Italy is the latest country to unveil plans to introduce a tougher system.
Content created by social media influencers with more than a million followers will be bound by the same rules as traditional media outlets, and face large fines if brand collaborations and commercial interests aren’t properly disclosed.
Speaking to La Repubblica, Giacomo Lasorella, President of the Italian Communications Authority, said: “The Wild West of influencers is over. We are starting with the big ones, but other influencers will also have to adapt.”
On the financial markets, Germany’s DAX index rose by 0.95% in January to end the month at 16,911 points. Meanwhile, the French CAC 40 index rose by 1.58% to end at 7,662 points.
Strong household and government spending helped the US economy beat analysts’ expectations at the end of 2023, with gross domestic product rising by 3.3% in the three months to December. Although this was down from 4.9% in the previous quarter, it was considerably higher than the 2% than many analysts had expected.
Annual growth, meanwhile, went up last year, with the economy growing by 2.5% in 2023, up from 1.9% in the previous year.
US President Joe Biden has welcomed the figures, saying: “Experts, from the time I got elected, were insisting that the recession was just around the corner. Well, we’ve got really strong growth. We obviously have more work to do but we’re making real progress.”
The President will also be cheered by a fall in inflation, which has come down to 3.4% in December. Although this is up from 3.1% in November, it is considerably lower than its peak of more than 9% in 2022.
The US Federal Reserve has been seeking to tackle inflation by raising interest rates and bring it down to its target of 2%. However, there is little indication that interest rates will come down in the next few months, as minutes of the most recent Federal Reserve meeting in December revealed they want to keep borrowing costs high “for some time”.
Another bright spot for the US economy was the labour market, as employers added 216,000 jobs in December, while average hourly earnings rose by 4.1% year-on-year.
In addition, the latest US Composite PMI Output Index from S&P Global indicated that US business activity went up in January, driven largely by increases in services and manufacturing activity.
However, there were some worrying headlines, such as news that department store Macy’s is planning to cut 2,350 positions, or 3.5% of its workforce and five of its shops in a drive to cut costs and increase sales.
In addition, media company Paramount has announced an as-yet unconfirmed number of job losses around the world, so it can operate “as a leaner company and spend less”.
January was a mixed month for the aviation sector, with the new year starting with a section of fuselage falling from an Alaska Airlines 737 Max 9 plane on January 5th. United Airlines subsequently carried out inspections of all its Boeing 737 Max 9s and identified bolts in need of “additional tightening” across this aircraft type.
American Airlines, meanwhile, posted a $19m profit for the final quarter of 2023, and Delta more than doubled its fourth-quarter profit.
In the automotive industry, General Motors reported a 14.1% in vehicle sales in the US last year, making 2023 its best year since 2019. This was fuelled by a particularly strong performance for its Buick and Chevrolet brands.
The end of 2023 was also a strong period for streaming giant Netflix, which added more than 13.1m subscriptions in the final quarter of the year. This was its strongest quarterly performance in three years, and driven in part by an upcoming crackdown on password sharing.
On the financial markets, the Dow Jones rose by 2.10% to end the month at 38,482, while the more broadly-based S&P 500 index went up by 2.49% to end at 4,888.
China’s Premier Li Qiang attended last month’s World Economic Forum Annual Meeting 2024 in Davos, where he hailed the performance of the country’s economy. Gross domestic product in China went up by an estimated 5.2% in 2023, he said, up from 3% in 2022.
“We did not seek short-term growth while accumulating long-term risks, rather we focused on strengthening the internal drivers,” he said. “Just as a healthy person often has a strong immune system, the Chinese economy can handle ups and downs in its performance. The overall trend of long-term growth will not change.”
However, the World Bank has predicted that China will see lower growth of just 4.5% in 2024. This, it said, will present a “headwind to other developed economies, especially those for which China is a major trade partner”.
Meanwhile, the China Securities Regulatory Commission has introduced new limits on short-selling, in an effort to tackle a deepening stock market sell-off, which it believes will create a “fairer market order”. Li had already called on authorities in China to take tougher measures to stabilise share prices, as the sell-off wiped trillions of dollars off Chinese and Hong Kong stocks.
The continuing crisis at Chinese property giant Evergrande deepened in January when a court in Hong Kong ordered its liquidation. The firm had racked up £236bn of debt, prompting judge Linda Chan to say “enough is enough”.
China has had somewhat frosty diplomatic relations with the US in recent years, but the two nations have agreed to hold regular meetings to create a more stable environment for businesses.
Chinese Commerce Minister Wang Wentao confirmed that regular meetings will be held at the ministerial level and below. This, he said, will aim to “create a good environment for the two countries’ economic and trade cooperation, especially in stabilising business expectations”.
While this represents a step forward for the two countries, tensions continue to exist over issues such as Taiwan. Beijing is unhappy that US defence firms are selling arms to Taiwan, which rejects China’s territorial claim.
In Japan, gross domestic product looks set to grow this year, albeit at a slower pace than in 2023. The Organization for Economic Cooperation and Development estimates economic growth of 1.0% in 2024, down from 1.7% last year.
Despite slowing growth, a growing number of Japanese businesses are feeling confident about the coming year. According to a Kyodo News survey, 73% of major Japanese companies, including Toyota and SoftBank Group, expect gross domestic product to increase in 2024, thanks to strong consumer and capital spending. This is up from 56% in 2023.
One particular bright spot in the Japanese economy is industrial production, which gained 1.8% in November after falling in October. This was the biggest monthly gain since June.
South Korea, meanwhile, is also seeing a slight slowdown in growth, with economists polled by Reuters attributing this to higher interest rates holding back domestic demand, despite an increase in exports.
Ha Keon-hyeong, an economist at Shinhan Securities, noted that while growth in the fourth quarter is expected to be at a similar pace as in the third quarter. It will “stay robust, despite weak domestic demand, on growing exports of main products such as semiconductors and automobiles”, he said.
Despite this forecast, South Korea-based technology giant Samsung is expecting to see a fall in its profits for the final quarter of 2023 of more than a third. The company estimates that its operating profit fell to £1.76bn between October and December, which is 35% down on the same period of the previous year.
On the financial markets, Hong Kong’s Hang Seng index fell by 9.16% to end January at 15,485, while Japan’s Nikkei index rose by 8.43% to 36,286.
Optimism around India’s economic prospects continues to grow, after HSBC’s India Composite Purchasing Managers’ Index showed private business activity expanded to its fastest pace since September at the start of 2024.
Meanwhile, a Reuters poll of economists suggests India is likely to maintain its status as the fastest growing major economy in the world, while the predicted growth rate for the current fiscal year has been upgraded from 6.7% to 6.9%.
Despite this positive environment, plans by Sony’s Indian arm to create one of the country’s largest entertainment groups have hit a wall. Sony had been planning a merger with Zee Entertainment, but amid reports of a disagreement over leadership, it says the conditions of the deal have not been met.
Bollywood is undoubtedly one of the biggest contributors to India’s economy and a beloved international export. However, the sector could be facing problems as the Screenwriters Association (SWA), which has more than 55,000 members across the country, is seeking to address what it believes is a power imbalance between producers and writers.
Anjum Rajabali, a senior member of the SWA, pointed out that most contracts have “arbitrary” termination clauses and offer “paltry fees, especially to newcomers”.
“They also don’t pay writers for reworking drafts and give producers the right to decide whether a writer should be credited for their work or not,” he added. The SWA plans to meet with producers and negotiate to make contracts “more equitable”.
In sanction-hit Russia, private sector wages have risen by 8% to 20% over the last year, according to figures from recruitment agency Superjob. However, the country continues to experience a worker shortage as the war in Ukraine continues, with a record 2.3m workers being needed to fill available jobs. According to the Moscow Times, the situation is so severe that Russia has resorted to using prison labour to prop up ailing industries.
In Brazil, the economy looks set to see a slight slowdown this year. According to a poll of economists by Reuters, growth in the country will fall from 3% in 2023 to 1.6% in 2024.
However, there was positive news as falling inflation in Latin America’s biggest economy prompted Brazil’s central bank to cut its benchmark Selic rate to 11.25%. This is the fifth consecutive rate reduction and good news for President Luiz Inacio Lula da Silva, who has called for interest cuts in order to drive economic growth.
President Lula will also be cheered by news that deforestation in the Amazon fell by almost half last year. The President has pledged to end deforestation by 2030, and the latest data from Brazil’s environment ministry shows it is at its lowest recorded rate in the last five years.
On the financial markets, India’s BSE Sensex index fell by 0.72% to end at 71,752 points. Russia’s MOEX index rose by 3.71% to close at 3,214 points, while Brazil’s Bovespa index ended the month down 4.13% at 128,642 points.
It’s easy to accidentally leave items behind when you’re checking out of a hotel at the end of your holiday. But a survey of 100 hotels by easyJet has revealed that some holidaymakers are forgetting to pack all sorts of weird and random possessions.
We’re certainly wondering how you could forget to leave with dentures, but people are also apparently flying home without prosthetic limbs and glass eyes. Others, meanwhile, have neglected to pack a full clown costume, and even wedding rings and personal photographs before checking out.