How can a new incumbent of No. 10 survive without a majority and with Brexit to solve? It defies the imagination. Yet if they do survive Brexit, against all odds, there could be an even bigger horror waiting around the corner: global recession.
For three years the economy has defied doom-laden predictions by aggrieved remainers. Suddenly, though, the economic news is looking ominous. In May, retail sales fell by 2.7 per cent compared with a year earlier. The manufacturing Purchasing Managers’ Index (PMI), an indicator which runs a month ahead of Office for National Statistics data, plunged from 53.1 in April to 49.4 in May, where any figure below 50 denotes shrinking activity. It was inevitably blamed by many on Brexit, but the gathering downturn is global. In the eurozone, the PMI for manufacturing has been below 50 for four months — and in Germany it is down to 44.3. It isn’t just Germany’s industrial sector: the economy as a whole avoided recession in the last three months of 2018 by the skin of its teeth. Italy was not so lucky, although it did succeed in clambering out of recession — just — in the first quarter of 2019.
Last month, manufacturing moved into contraction territory in Japan and South Korea, too. Emerging economies have been stuttering. And now comes Trump’s trade war. Trade wars, the President claimed on taking office, are good and easy to win. But perhaps not good and easy enough. The imposition by the US of punitive tariffs on nearly all Chinese goods has unnerved markets, which had so far remained robust. The effect on world trade is beginning to show. In April, the global trade index published by the Netherlands Bureau for Economic Policy Analysis showed its first year-on-year fall since the 2008/09 crisis — although it did rebound last month to annual growth of 0.5
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