Well the dust has now settled on the Eurozone Summit last week-end, and in essence was anything actually achieved?  There has been so much comment about Mr Cameron exercising the veto, to the chagrin of the leaders of France and Germany.  But Mr Cameron has since received a great deal of support and respect for the stance he took, and now it seems that he is no longer alone amongst the group of 27.  Indeed the outcome may well be that other countries will now lobby against the deal and treaty changes suggested by Sarkozy and Merkel. 

As Christmas Approaches

Perhaps by reading the newspapers one could think that the only important issue in the world at the moment is phone hacking, Rupert Murdock, Rebekah Brooks and News International. These events are trivial when compared to what is going on in the financial markets.

Since the turn of the year whilst there has been some volatility on the markets the FTSE has still remained around the 6000 mark and the underlying sentiment is still that the FTSE will move towards the 6600 level during the course of this year.  Of course there is still the threat that statistically we could experience a double dip recession and no doubt Ed Balls will be keeping his fingers crossed that this happens even though he doesn't want to expect any responsibility for the mess he and Gordon Brown got us into.  No doubt George Osborne will be praying that we have no more snow this winter as this was his week crie de coeur to explain away the poor figures of the last quarter.

A few short weeks ago, the FTSE 100 was reluctant to pass through the 5800 level.  Once it had done so, it then surged on towards 5900 yet earlier this week it showed some reluctance to pass through the 5900 barrier.  At the time of writing these notes the FTSE rests at 5973 points.  We need to go back to May 2008 to register when the FTSE was previously at this level. 

We are a few months further on and the new Coalition Government has certainly started to get to grips with all the problems inherited from the previous Labour administration.  Whilst we are not out of the woods yet and there is still some pain to go through, the Stock Market continues to climb and at the time of writing it is knocking on the door of 5900 points. There was a surge last week driven by the further layer of quantitative easing introduced by the Federal Reserve in the USA but in spite of this there is still the view that the Stock Market will remain buoyant.

As I write, we have just watched the State Opening of Parliament following the formation of the unique coalition government under the stewardship of the Conservative Prime Minister, David Cameron.  Of course, only time will tell how successful this alliance will be and whether or not it will indeed stand the test of time, particularly the 5 year length of a fixed term parliament.  For sure, the focus was clearly outlined in the Queen's Speech where the first priority will be cutting the enormous budget deficit.

With only a couple of weeks to go before the General Election, we must give thought to May 7th and beyond.  There is a great deal of talk of a Hung Parliament which, in my view, is the last thing that the UK economy needs at this time.  The most pressing matter to be dealt with by the incoming government, of whatever hue, is the massive debt that has been allowed to build up over the last 13 years.  A strong and decisive leadership is what is required and it is unlikely that this would be the outcome of a Hung Parliament.  The problem is the indecision a Hung Parliament would create.  We would, perhaps, be marking time until the next election is called, meaning all interested parties would have a say in the "indecision" process.

 

Well Mr Darling has today presented not so much a pre-Budget Report but more a pre-Election set of proposals which on the surface does very little to help him fulfill his promise to cut public sector borrowing by half. In essence the content of the report is very limp and in no way, in my opinion, addresses the underlying problems that we are facing in the UK economy.

As was announced yesterday (23rd October 2009), the UK is currently in the midst of its longest recession ever, after figures showed that the economy contracted once again between July and September.  Whilst many European economies are showing signs of emerging from recession, the UK economy has now been contracting since early 2008.