2. Jonathan Bradley THE GLOBAL ECONOMY IN 2004 HOW ROBUST IS THE GROWTH?

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5. u INFLATION OR DEFLATION? u A SUSTAINED RISE OR FALL IN THE OVERALL PRICE LEVEL

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7. THE WORLD ECONOMY IS INFLATION RECOVERING, AND THE TALK AMONG ECONOMISTS IS NOW MUCH MORE ABOUT INFLATION

8. Jonathan Bradley THE ECONOMIC AIM: A SAFE MIDDLE COURSE

9. Jonathan Bradley WORLD GDP GROWTH 2003 AND 2004 STRONGER!

10. Jonathan Bradley JAPAN PUTS OUT THE FLAG u After more than a decade of stagnation, Japan looks as though it has turned the corner. u At last Japan has become more normal!

11. Jonathan Bradley What is now driving the recovery? u Very low interest rates u Continued expansionary fiscal policy u Recovery in company finances u Buoyant consumer demand u Some stock market recovery

12. Jonathan Bradley GLOBAL SHORT TERM INTEREST RATES Source: IMF

13. Jonathan Bradley BUDGET DEFICITS COMPARED 2004 (est)

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16. OIL PRICE

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20. No.1

21. Jonathan Bradley PRODUCER PRICES 2003/4 Source: Economist No.2

22. Jonathan Bradley THE MAIN ECONOMIES RIGHT NOW u STRONG GROWTH EVERYWHERE EXCEPT EURO AREA u ENERGY PRICES u BEGINNINGS OF INFLATION??? u MAJOR IMBALANCES WITH USA

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25. DESPITE:

26. Jonathan Bradley NOW ON THE WAY UP….

27. Jonathan Bradley ALTHOUGH, INFLATION STILL OK

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29. 1: HOUSE PRICES IN BRITAIN u Are they too high? u Is there a bubble? u Will they fall? u What will happen if they do?

30. Jonathan Bradley u STOCK MARKETS AND LAND PRICES GO UP FAR TOO MUCH u BUBBLES!! u WHEN THEY BURST ECONOMIES SUFFER

31. Jonathan Bradley Impact of 10% house price fall 4.7 3.6 3.3 5.0 4.5 5.0 4.5 5.0 4.5 2004Q4 2005Q4 2006Q4 Interest rates 1.5 1.3 0.8 1.5 1.1 0.6 1.5 1.0 1.5 1.7 2004Q4 2005Q4 2006Q4 CPIX inflation 3.0 1.9 2.4 3.0 1.2 0.7 3.1 2.2 1.6 3.1 2.8 2.3 2004 2005 2006 GDP growth Wealth & confidence Wealth effects Wealth & confidence effects with monetary response No monetary response OEF central forecast Source: Oxford Economic Forecasting LOOK AT THE RED NUMBERS

32. Jonathan Bradley 2: HUGE CONSUMER DEBTS! Total UK, May 2004: £993 BILLION

33. Jonathan Bradley SO, WHAT NOW? In the world: u Little danger of deflation u Growth generally healthy u Main threats from energy prices and politics In Britain: u Still strongest growth in Europe, BUT u Highest interest rates in Western Europe u Main threats political and from a housing asset price bubble

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