Investors under weather as forecast turns gloomier

The biggest companies on the London Stock Exchange have seen £212 billion wiped off their value since the beginning of July and there is great uncertainty over what happens next.

Britain’s index of leading shares pushed above 6,000 in early July, only to plummet below 4,800 in just four weeks. Equities pulled back late on Friday to avoid another fall below 5,000, but the weight of argument favours share prices at best treading water for some months, with some warning of a plunge below 4,000.

Markets remain unconvinced by the slow progress on the Eurozone talks; they are deeply suspicious of what is lurking in the US and they don’t like hearing that even China is slowing down. Josef Ackermann, the chief executive of Deutsche Bank, struck another blow by warning that the global economy is on the brink of recession. When the Germans go negative you know you’re in trouble.

Amid calls for more quantitative easing (QE) and other stimulus, the mood is moving on from kick-starting the recovery to mitigating an inevitable slowdown or “reversing the shock”. Sorry to sound so gloomy, but the brink of recession may be the best we can hope for. Some analysts think the world could be heading for the Great Stagnation.

So what would that mean? Essentially, anaemic growth, persistently above-average unemployment and weak returns on investments, including property. It could last for years.

The Bank of England’s monetary policy committee meets this week with an outside chance that it could introduce more QE, although the committee is more likely to wait until next month, by which time the third-quarter GDP figures will have been published.

But QE has so far failed to have the desired impact either in Britain or the US. We’ll just have to pray for a miracle.

Swinney on track for prohibition era

AFTER the mauling he got last year when he tried to introduce his first levy on big retailers, John Swinney must have thought he’d come up with a workable alternative.

But the finance minister’s Plan B is proving equally messy. As we reveal today, analysis of the implications of the latest proposal would impose huge burdens on selected companies and probably encourage them to take drastic action to avoid it. They may even stop selling cigarettes.

Is this a good thing? Only if you believe that this is part of a sensible health strategy, but it is turning ever more into a form of prohibition. And we know what happened when the Americans tried it.

Defences weaken at Axis-Shield

ANOTHER Scottish growth firm looks certain to lose its independence in the next week or so, partly because of the slump in world stock markets.

Until now, Dundee-based diagnostics company Axis-Shield has appeared confident of seeing off the unwanted interest of US firm Alere, but nervous investors have opted to sell up, handing Alere a near 30 per cent stake.

The company, forged out of a Dundee University lab, has been a solid performer in Britain’s healthcare sector, but success will always attract the interest of bigger rivals.

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