Financial markets around the globe let out a brief sigh of relief and enjoyed a couple of daysâ rally. Unfortunately the news by the end of the month was not so good, as figures from the (for now) worldâs biggest economy showed a fall in GDP in the last three months of 2012. Admittedly the fall was only 0.1% and was counterbalanced by some good news on jobs but it was still a fall â and the first one for 3½ years.
The news was worse in the UK, with Januaryâs blast of snow and freezing weather raising the prospect of a âtriple-dipâ recession. As shops and UK high streets closed up, Messrs Cameron, Osborne and Johnson ventured off to the World Economic Forum in Davos to make coded and not-so-coded attacks on each other.
The crisis in Europe rumbled on, the month ending with the news that Spanish Prime Minister Mariano Rajoy had denied receiving âŹ250,000 in âsecret payments.â Never mind, Amazon made so much money over the Christmas period that theyâll soon be able to buy Europe and solve all our problems. World stock markets are clearly anticipating this, as all the major markets ignored the short term worries to make positive starts to the year.
UK
January in the UK was dominated by bad news from the national High Street â and by the sound of tills not ringing â with both HMV and Jessops closing their doors. A few days later they were joined on the casualty list by Blockbuster, as a simple rule started to emerge: if youâre on the High Street and Amazon sell what you sell, youâre in trouble.
There was news that some of the big hedge funds were starting to bet against UK retailers, including Debenhams, M&S and Tesco (whose month hadnât got off to the best of starts when horsemeat was discovered in their beef burgers).
A slump in retail is always worrying, but itâs even more so when it comes just after Christmas. Significantly, figures from the British Retail Consortium showed the number of shoppers down by 1.2% across the UK when December 2012 was compared to December 2011 as yet more money was spent online.
GDP in the UK shrank by 0.3% and yes, more snow and ice could apparently lead to an unheralded triple-dip recession. Amid the snow and ice of Davos, Boris Johnson took the chance to criticise George Osborne, saying that the Governmentâs austerity programme had gone far enough.
Good news was hard to find in January: Jaguar Land Rover created 800 jobs at Solihull and unemployment fell to 2.49m (although that was before the carnage in the retail sector was factored in). Having fallen by 1% in December house prices rose by 0.5% in January. Whether that slight improvement can be maintained with a reported 8m people struggling with their mortgage payments is very much open to doubt.
Proving once again that stock markets look at what they think will happen in the future and not whatâs happening now, the FTSE had its best January
