Here comes the double-dip
The markets are nervous, and everywhere you look it's showing. Fasten your seatbelts - it looks like we're about to head into the double-dip.
After sliding again last week, markets have remained nervous over the past few days. The MSCI World Equity Index hit a nine-month low on Monday, while America's S&P 500 index is near a seven-month low; it is down by almost 15% from its recent high. Copper, a widely watched leading indicator for the global economy, has fallen to an eight-month low. The euro is at a four-year low and gold has hit new highs in sterling, euros and dollars.
The pound wobbled too after ratings agency Fitch reminded the markets that Britain faced a "formidable" fiscal challenge and needed to speed up its deficit reduction plans from the path sketched out in the last budget.The government is already preparing cuts to be implemented more rapidly.
What the commentators said
Jittery markets are signalling that "there is going to be a double dip", said Hamish McRae in The Independent. Growth is set to turn down in Europe. The "meltdown in confidence" over Greek debt has made it clear to governments that they can't wait until growth is powering ahead before starting on the "fiscal clean-up".
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Even Germany is now outlining plans to cut borrowings. And over the next year, it's hard to see the private sector compensating for the demand withdrawn by the public sector, especially given higher taxes. The markets' gloom over the eurozone is already beginning to affect business and consumer confidence in Europe, said Capital Economics. Once austerity measures kick in, confidence will fall further, "leading the economic recovery to fade".
Nor are things looking too good in the US. The soft labour market is one sign of soft underlying demand, while another is that the appetite for mortgage loans has slipped to a 13-year low, said David Rosenberg of Gluskin Sheff. Bank lending continues to shrink.
And now the ECRI Index of leading indicators, which tracks various gauges of the health of the economy, is at a one-year low and heading in the wrong direction "at a record rate". As the "fiscal largesse" that's been passing through the system dwindles, the economy is going to shrink again. And as we head into a double-dip, said Albert Edwards of Socit Gnrale, the stockmarket downtrend will resume.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
Michelin Key Hotels 2025: the top destinations in the world
The Michelin Keys have been awarded to spectacular hotels across the world. From Marlon Brando's private resort in Polynesia to a Bvlgari hotel in Tokyo, we look at some of the most extraordinary stays in 2025
-
MoneyWeek news quiz: How much could you get in car finance compensation?
The car finance scandal, inheritance tax, and house prices all made headlines over the past few days. Test your knowledge while reviewing this week’s top stories with MoneyWeek’s news quiz