How Windy Is It . . .? Monday, 21st March 2016 – No.171
How windy was it last week?
Last week was a busy week with the unveiling of the 2016 Budget. The most notable changes were the increased ISA allowance to £20,000 (post 06/04/17), and the new Lifetime ISA, which is targeted towards younger savers. Every £4,000 you invest, the Government will top this up by a further £5,000, on the proviso that you spend the LISA on your first property under £450,000, or keep it until you are 60. UK growth is forecast to be 2.2% in 2017 before levelling out at 2.1% for the next three years. The March Bank of England meeting was broadly a non event as expected and the MPC (Monetary Policy Committee) voted to keep the policy unchanged.
The Federal Reserve had their meeting last week and surprised many economists by forecasting just two quarter-point rate rises this year, down from an estimate four in December. The Dovish outlook sent the dollar sliding for the week against a basket of global currencies. However, the decline gave commodities a lift (Although at the time of writing, crude oil prices have declined).
Staying in the US, President Obama is the first US President to set foot on Cuban soil for 88 years to meet with President Raul Castro, pressing the Cuban Government for economic and democratic reforms while hearing complaints about continued US economic sanctions.
Elsewhere in the world, Australian stocks fell after Prime Minister Malcolm Turnbull recalls parliament and bought the Budget forward, setting the scene for an early election. Turnbull has been trying to pass through labour reform bills but has faced huge hostility. As a result, he has threatened to dissolve both houses of parliament and call an early election on 2nd July. Australian shares slipped last week in view of politics as well as mining and energy companies were hit by weaker metal and oil prices.
Staying in Asia-Pacific, The Bank of Japan left policy unchanged this week but lowered its economic projections (exports and housing investment specifically).
Back to home, this morning the CBI (Confederation of British Industry – namely the UK’s premier business organisation), announced a UK exit from the EU would cause a “serious economic shock”, potentially costing the country £100bn and nearly £1m job losses. Their report stated an exit could cost as much as 5% GDP and £1m jobs by 2020. The CBI said it would not align itself with either side of the debate, but following the result of the survey, has set out the economic case for Britain staying within the EU.