The message from the IMF meeting in Washington this week is that the world economy is in a precarious position.
Brexit is just one instance of a wider uncertainty as the long-established rules of the game, in particular a belief in free trade, are being ripped up. The idea that a US President would threaten to wage a trade war with Europe is a case in point.
Polarised politics are a mounting threat to financial markets. In the UK, for example, the Brexit debacle has so far left markets unperturbed, but one can easily imagine the response to a Corbyn government.
Fear factor: In the UK, for example, the Brexit debacle has so far left markets unperturbed, but one can easily imagine the response to a Corbyn government
Underlying all this is an epic battle between those who have lost faith in globalisation – the interdependence of the world’s economies – and those who still believe it can deliver prosperity to the maximum number of people.
Anti-globalist views are driven by discontent among those who believe that they have missed out on the gains, who think the system is rigged to favour the rich and who fear their jobs are threatened by new technology.
This sense of grievance is not confined to the poorest. As the OECD’s latest report shows, the once-comfortable middle classes are being squeezed. They are insecure, at greater risk of falling down the social ladder and are receiving less than their fair share of the benefits of growth.
Their incomes have barely risen for years, while key elements of a middle-class lifestyle such as housing and education have become more expensive.
The so-called liberal elite has ignored or looked down on the losers, including the middle class, while the populists have exploited social and economic problems to create conflict. Baffled and angry voters have bought into simplistic ‘solutions’ that risk making their situation worse.
What can be done? Investing in infrastructure, innovation and research would help, as would prioritising education for children and retraining for adults who have lost their jobs.
The tax system needs an overhaul so it is fair and progressive, and so that multi-national companies are not able to dodge paying a reasonable share.
None of this is easy or quick, but it’s better than snake oil.
The bosses of Indivior plainly feel an injustice is being done to them by US prosecutors. The chairman – who says allegations they deceived doctors about their anti-addiction treatment are ‘flat wrong’ – exudes injured innocence with every syllable.
Regardless of the fairness or otherwise of the accusations, running up against the US authorities is a total nightmare.
Just ask Standard Chartered.
Back in 2012, when it was hauled up for money laundering and sanctions busting, executives briefed that they had merely been trying to help innocent Iranian pistachio sellers to export their wares and implied they would soon be vindicated.
No chance. The case rumbled on until this week when the bank agreed to pay more than $1bn to settle.
Or look at BP, which took years to recover from the Gulf of Mexico oil spill and the subsequent retribution through the US courts.
Then there is Mike Lynch, the former Autonomy boss. He is defending himself in the UK high court in a civil case alleging he perpetrated a £3.8billion fraud and also faces criminal charges in the US over the affair that carry a maximum sentence of 25 years. Lynch, who says he is innocent, is determined to fight the case and has the wealth to do so.
Whatever the rights and wrongs, it takes a brave individual, or company, to take on the US justice system.
Well done Dave – but don’t get complacent. Tesco chief executive Dave Lewis appears to have done a good job at restoring the group’s fortunes after it was laid low by an accounting scandal a few years ago.
I say ‘appears’ because it’s a dangerous business for columnists to praise chief executives, as they do sometimes turn out to be undeserving. Unless there are some hideous problems brewing beneath the surface, though, Lewis deserves a pat on the back.
Profits are up, the dividend is rising and as an added bonus from his viewpoint, the Sainsbury-Asda merger looks to be off.
But there’s never much time to sit back and bask in retailing. Discounters Aldi and Lidl are still seizing market share and if Amazon gets into the UK grocery scene in a big way, it will be a real threat.
Business rates still need an overhaul and high streets are still in crisis. And let’s not even mention the ‘B’ word.
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