Comment: OECD joins Cameron in economic warning

The think-tank knows that the two western leaders of the recovery, the United States and the UK, cannot remain immune from such developments in two such important global economic zones, particularly if growth rates in emerging markets slow down as expected.

The OECD has cut its forecast for UK economic growth this year to 3 per cent from 3.1 per cent, and also by 0.1 per cent to 2.7 per cent in 2015.

Along with the cautious comments of Mark Carney, governor of the Bank of England, to the Treasury committee yesterday, that first UK interest rate rise after nearly six years of being at historic lows looks to be receding into the distance.

Amazing that early last summer many in the market were only debating whether that first UK monetary tightening would happen late in 2014 or early 2015.

Macro-economic pressures, exacerbated by geopolitical nervousness, typified by Russia’s stand-off with the West over Ukraine, have changed the mood in a matter of months.

The OECD warned of a global economy “stuck in low gear”, with its secretary-general Angel Gurria saying, “we are far from being on the road to a healthy recovery”.

It is far from what we want to hear six years after the financial crash that led to recession in the West. Russia is under the financial cosh due to western sanctions over Ukraine but, economically, this policy is rather a one-trick pony anyway, centred on mineral and energy exports.

Meanwhile the Chinese economic miracle is slowing, and consumer demand in emerging markets has been faltering for well over a year now.   The OECD’s sober assessment will persuade many early sceptics of Prime Minister David Cameron’s recent warning about economic warning lights flashing on the macro dashboard that perhaps he was not exaggerating for political reasons ahead of next year’s meeting with the voters.

High street battle will hit our fragrant friend

Nationwide came out of the financial crash more fragrant-smelling than most, its conservative business model standing the mutual in good stead. And the good times continued because, for several years, many of the bigger banks were more focused on rebuilding their balance sheets to meet regulatory requirements in the wake of the crash.

Their retail offerings took a back seat while the bigger picture of toxic asset reduction and business retrenchment was addressed, and Nationwide was one of those that made hay because of it.

Even though the building society’s latest profits performance is very creditable, it knows the going gets harder from here as the clearers have largely cleaned up their balance sheets and are now free to focus on their high street offerings again.

Interest margins will tighten as a result as new product offerings vie for consumer patronage. Things are going to get tighter.