Q4

Last year the Bank of England Governor, Mervyn King, described the decade of the nineties as having been a n.i.c.e. one for the UK economy, given that it had been growing at an above-average trend rate.

The acronym he coined to describe the period reflected an economy that was non-inflationary and consistently expansionary (n.i.c.e.).

In a more recent speech the Governor referred to that period as having given way to a new period that he described as n.o.t. s.o. b.a.d. (not of the same order but also desirable).

With apologies to the Governor we borrow his terminology this quarter to highlight the fact that while global growth is peaking in 2004 (nice) it should slow next year but nevertheless remain at a fairly high level (not-so-bad).

The same can be said for the change in a number of economic variables from 2004 to 2005 (base metals prices, for example). The fly in the ointment, however, remains the persistently high and volatile oil price.

All of the world’s central bankers have acknowledged the problem of high oil prices although many admit that the problem is not yet as severe as in previous periods of peak oil prices.

Given the volatility and unpredictability of oil prices, it can quite easily happen that the not-so-bad global scenario turns sour (spoiled by oil’s unrelenting rise) - our words, not the Governors'.