The Week in Review – manufacturing output is flat, the trade figures disappoint again but the World Bank suggests there is hope for the world. Down load The Saturday Economist 16th June 2012

Despite the problems in Euroland, the slow down in India, China and world trade, the World Bank released a relatively upbeat assessment for the 2012 Global Economic Prospects. World trade is expected to grow by 5.3% and world GDP will grow by a respectable 2.5% despite negative growth in the Euro area.

The Governor of the Bank of England was not quite so positive at the Mansion House Dinner on Thursday night. A night of long shadows and dark clouds would sum up the oration, with dark clouds featuring six times in the twenty minute speech. Eventually, he said, the storms from overseas will have passed over our shores and the economic skies will begin to brighten. Excellent.

Slightly alarming – the new round of liquidity provision for banking with a “Funding for Lending” programme. The Bank is planning to swap collateralised mortgage debt or SME loans as security for T bills. The Extended Collateral Term Repo Facility will also be brought into play and quickly. The Chancellor made a good speech, sitting next to his speech writer and private secretary I can say little else. The £100 billion plan to support bank lending into SMEs and Households may be better intentioned than effected in the end. Is this policy planning or panic reaction. On refection I have decided, It is planning for panic.

In other news this week, the trade figures and manufacturing output figures will disappoint policy makers but come as no surprise to readers of the Saturday Economist.

Manufacturing output is flat and the trade figures just get worse. So what’s new. The problems in Europe just a small part of the problem. JKA

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