SOMETIMES it’s best to start with a confession: here’s mine. Apparently I’ve been at work the last two weeks but frankly I don’t remember. The only thing I remember is the kaleidoscopic haze of an amazing party called London 2012.
There was a brief moment last week when the dancing stopped to change the music. On the one day Britain wasn’t winning gold medals, the Bank of England delivered a big downgrade to the MPC’s forecasts for economic growth. It served as reminder that, yes, this is a fantastic bash but when we wake up we’ll still be facing a big hangover from the last party. But there is some Alka Seltzer. The fall in inflation should lessen pressures on real household income and the British Retail Consortium suggests the Olympics did help food and drink sales in the final week of July. As the Games only got into full swing in August, that could prove a useful boost, if short-lived.
Capital Economics says the economy will contract again in the fourth quarter and by the time it starts to grow at a healthy pace again, “we could be getting ready to celebrate the next Olympics.” A sobering thought.
Still, the FTSE 100 hasn’t done too badly, up nearly four per cent in the last two weeks. In the last five weeks, Germany’s Dax and France’s Cac 40 are both up over eight per cent, thanks to Mario Draghi ensuring there will be no Eurozone breakup this month.
Still, I can worry about policymakers finally getting on top of the euro problem in September, leave concerns over deleveraging to the autumn and put to the back of my mind challenging Chinese trade data. For the rest of the summer all I want to do is stay in my Olympic bubble, watch endless reruns of great sporting moments and enjoy the emotion of puffing my chest out with national pride.
Ross Westgate co-hosts Worldwide Exchange daily from London and anchors Strictly Money on CNBC.