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The Financial Ecosphere – a Look Back at 2017

We’ve reached the end of another year and 2018 is now upon us.  Before moving ahead into the future, we’re taking a look back at 2017 and some of the issues that have affected business and debt here in the UK over the past twelve months.

With predictions at the beginning of 2017 that debt restructuring and bankruptcy may be the biggest growth industry, 2017 got off to a pretty gloomy start.  However, when we look back, the financial markets and the global economy have had a pretty good year and all the major negative expectations (such as a market crash in the event of a Trump presidency, a UK Brexit-triggered recession and a collapse of the Eurozone due to Italy’s failed banking system) failed to materialise.  Rising stocks and positive growth have dominated the news so let’s take a look at the issues involved.

The Bank of England’s first increase in interest rates in a decade is a positive step towards normalising the monetary policy in a bid to eventually lower interest rates to pre-crisis levels.

Bitcoin has been one of the biggest surprises in the finance industry in 2017 as it entered the mainstream and is poised to change the global economy forever.  Bitcoin began 2017 trading at $908 per coin and by the end of the year the price of a coin is more than $16,000 with investors across the planet scrambling to get involved.

Bad news for the City of London came in the shape of major financial institutions planning to shift staff and operations out of London and the rest of Britain once we leave the European Union in March, 2019.  Major lenders are planning new offices in European cities when Britain loses its financial passporting rights that come with single market access.

The UK’s inflation level, meanwhile, has risen to its highest in five years, climbing to 3.1% in November 2017 as a result of the sharp fall in the pound since the Brexit vote.  Inflation’s impact on our economy is being intensified by the fact that wages are growing more slowly than prices are rising, leaving the average Brit with less disposable income.

The London property market which has flourished in recent years experienced a dramatic downturn while property transactions around the UK stumbling along.  This is being blamed by a combination of factors, including bloated London prices, slow progress in negotiating Brexit and concerns that a further rise in interest rates from the Bank of England driving up mortgage costs in the coming years.

The value of all the stocks in all companies in every country of the world combined (known as the global market cap) is $80 trillion and fast heading towards $100 trillion.  While most of us can’t get our heads around this, economists are worried because such a scenario was last seen just before the Great Depression of the early 20th Century. 

To end our look back at 2017, the booming economy in China has economists nervous as it’s based on booming levels of debt and a dependency on credit to fuel growth, posing a threat to the financial stability of the global economy.  According to some experts, China faces twice the probability of a financial crisis than any other major global economy.