The biggest news during October came from the USA when the Democrats and Republicans could not agree on the new budget so in part the US government shut down. The worrying bit is that the US economy is very much now in the hands of Congress and their decision could have a wider impact on the rest of the worlds economy. Unfortunately there are around 800000 Government employees who now are waiting at home to be called back to work. Interestingly whilst we may see this as a crisis this is the 17th shutdown since 1977. There is however another potential crisis lurking just around the corner and that is the possibility of the US defaulting on its debts unless politicians agree to extend the amount of debt the government can incur. It is anticipated that at current run rate the government could reach their limit on the 17th October however I do see a stay of execution maybe with a new temporary time scale being agreed and I suspect if you are reading this in November or December a solution may have already been provided. The Federal Reserve will also introduce a new “head� to replace Mr Bernanke and it seems Janet Yellen is odds on favourite.
that business activity is growing, looking forward their are hopes that the third quarter for the UK will be a strong one as employees also start to take on new staff.
Moving across to the Eurozone the European Central Bank agreed to leave rates at .5% and decided against additional financial support but Mr Draghi is always keen to remind people The ECB will do everything it can to Another bright note came from the support the euro. manufacturing sector which showed 56.7 ok a slight decrease from the We have seen political uncertainty previous month but still very much in knock Italy however sense seems now positive territory. to have crept back into the equation Depending on who you talk to their and Mr Berlusconi is supporting the is some growing concern that the current government so investors liked property market may start to overheat this and Italy saw its 10 year bond and in August the UK approved around yields drop. News from Spain is not 62000 new mortgages and of course quite so encouraging at the moment Mr Cameron has also brought forward as it may be forced to make further the help to buy scheme. cuts to meet targets set by the EU. We now know that a couple of banks will provide the funds for buyers and only look at 5% deposits, the remainder to be on mortgage so in certain areas I suspect we will see increased demand and prices.
In Portugal, we hear that the economy expanded for the 3rd quarter after posting its first growth in the 3rd quarter. Strangely enough German Construction fell and the PMI came in at 52.1 a fall of around 3% from August, it seems that industrial activity was Car sales across the UK were also up at down but on a positive note Ireland their highest level for 5 years and was austerity cuts will be less in 2014 as it the 19th month seeing an increase so battles its way to growth. Brits are spending, the retail sector is also gearing up for the festive period. One thing on the horizon for the Eurozone is a possible review of the The Bank of England confirmed that it blocs 130 biggest banks before the would again hold interest rates and central supervision comes into play. would not look at printing of new money. Mr Carney the governor also By the time you read this rates I am has a new Finance Director who starts sure will have changed so contact on November the 4th being Ralph Moneycorp, our preferred currency Coates. partner for a current rate.
On a brighter note the Purchasing Managers Index saw a rise of c.5% and hit a high of 56.2. but non manufacturing Even better news for the UK came from They can be contacted on did see a backward step. the International Monetary Fund who Tel: 952 587 657 have revised their growth figure for the when talking to them please mention In the UK the services sector saw a nice UK upwards, how MR Osborne and Smart magazine. high of 60.3 and continues to show Cameron enjoyed hearing that news.
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