UK inflation dropped from a five-year high of 3.1 per cent in November to 3 per cent in December. The slight decline, the first drop since June 2017, was partly due to sterling depreciation and higher import costs starting to fall out of the figures. This looks likely to fall further over the course of the year, reducing the likelihood of the Bank of England raising interest rates in the near term.
Construction company Carillion filed for compulsory liquidation with questions amounting over whether the UK government should have continued to award outsourcing contracts to the struggling company after a succession of profit warnings last year. The effect was widespread with the vast range of contracts and suppliers distributed across the country.
The US government was forced to shut down late last week after Republicans failed to secure enough votes to pass a funding measure. This was the fourth shutdown in 25 years and the escalating political games brought the widespread debt issue to the forefront of investors once again.
China’s economy grew 6.9 per cent in 2017, the fastest since 2015, even as policymakers made headway towards curbing excessive debt growth. The trade-off between growth and deleveraging will get tougher this year, with a slowing property market and tighter controls on local-government infrastructure spending expected to drag on the economy.
Canada raised its interest rate for the third time in less than 12 months after a string of unexpectedly strong economic readings prompted policymakers to rethink their cautious approach to the pace of monetary tightening. The rate stands at 1.25 per cent, with the Bank of Canada citing stronger than expected US and global economic growth. Global commodity prices are higher, and It now expects the economy to grow 2.2 per cent this year and 1.6 per cent in 2019, following an estimated 3 per cent growth in 2017.
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