You will no doubt be aware that September was a month when shortages dominated the headlines. As we will see below, it was by no means a problem confined to the UK. Sadly, it does not look like a problem that will quickly disappear. We have, for example, written previously about the shortage of semiconductor chips, which has hit car production around the world. In September, the boss of Daimler suggested that this could last through 2022 and another two years.

September was also a month when global diplomacy, and its possible implications for trade, reared its head. Chinese jets flew into Taiwan’s air defence zone, and North Korea launched a test cruise missile into the Sea of Japan. Most significantly, the US, UK and Australia signed the AUKUS deal, allowing Australia to receive nuclear powered submarines.

Predictably, China criticised the deal as threatening stability in South East Asia, and France was said to be outraged after losing the contract to build the submarines. Any Australia/EU trade deal will now not happen until next year at the earliest. Despite talks between Boris Johnson and Joe Biden, a UK/US trade deal also looks unlikely at present.

September saw the oil price rise above $80 for the first time in three years and, perhaps unsurprisingly, it was not a good month for world stock markets, with the majority of those we cover in the Bulletin, falling in the month.


When he was Chancellor of the Exchequer, George Osborne seemed to preface every Budget speech by reminding us that the UK was only a small part of the world economy. Whatever action he took, events elsewhere could easily render it irrelevant. September, and perhaps the months running up to Christmas, may well be a period when Osborne’s Law holds true. Supply chain problems have caused shortages, whether on the supermarket shelves or at the petrol stations. Furthermore, City AM reported that the shortages were suppressing UK manufacturing growth.

Where you put the blame for the shortages may well depend on your political point of view, However, as we report below, supply chain issues are not a problem confined to the UK, and the power shortages in China may make the position worse and push up prices, around the world.
Away from the headlines about shortages, there was the usual mixture of good and bad news. In the middle of the month, it was reported that the UK economy, grew at the fastest rate of any of the G20 countries in the second quarter, with growth of 4.8% between April and June. By the end of the month, this figure had been revised upwards to 5.5%. The ratings agency Fitch, has predicted that the UK economy will grow at 6.6% this year, which is well ahead of the forecast from the Office for Budget Responsibility.

The UK has applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and September brought the formal start of the talks. The CPTPP is a $9tn (£6.7tn), eleven country trading bloc. Donald Trump famously withdrew the US from the agreement but, as we report below, China has now applied to join it.

Much of the work on the UK’s application to join the CPTPP, was carried out by Liz Truss when she was International Trade Secretary. In September’s reshuffle she became Foreign Secretary, with Anne-Marie Trevelyan taking over her previous role.

The Government was in the news for much more than a reshuffle in September, as it broke two manifesto commitments, increasing national insurance to pay for social care and temporarily suspending the triple lock on pensions.

The end of September brought the end of the furlough scheme, the Coronavirus Job Retention Scheme to use its full title, which will unquestionably see some workers lose their jobs. The BBC reported that approximately one million workers were still on the scheme as it ended.

That said, job vacancies went past the million mark in September, and there are plenty of stories of companies, including Amazon, offering inducements as they look to recruit temporary staff for the Christmas period.

Let us end the UK section where we began it, with the Chancellor of the Exchequer. Rishi Sunak will present his second Budget of the year on October 27th. What was a difficult task in March looks even tougher eight months on, as he tries to keep the recovery going and start to pay the coronavirus bill. In addition, he will need to keep a lid on inflation, which reached 3.2% in August as food prices rose, and has been forecast to reach 4% by the end of the year.

For now the Bank of England is saying it does not expect any interest rate rises, to counter inflation, this year. Any rate rises would, of course, push up the cost of servicing the Government’s debt. Borrowing in August was higher than expected at £20.5bn, down on the same month last year but still the second-highest August figure on record.

The FTSE100 index of leading shares had a relatively quiet month. Having started September at 7,120, it ended the month down just 34 points at 7,086. The pound was down by 2% against the dollar, closing at $1.3458.


September got off to a positive start in Europe, with Ryanair predicting a rapid rebound in air travel, and revealing that it had beaten its forecast numbers for August.

Wizz Air announced similar figures, with passenger numbers up more than 50% in August to around 3.5m. However, passenger numbers were down 44% for the twelve months to August, illustrating the long shadow the pandemic still casts over the travel industry.

The main story in Europe, though, was the German General Election, held on September 26th. Having stepped down as leader of the Christian Democrats, CDU, in March 2018, Angela Merkel had made it known that she would not be seeking a fifth term as Chancellor, leaving new leader Armin Laschet as the party’s candidate.

Opinion polls throughout the campaign did not make good reading for the CDU. The Social Democrats, SPD, topped the poll with 25.7% of the vote and a provisional 206 seats in the Reichstag. The CDU achieved 24.1% and 196 seats. With 368 seats needed to form a government there could, in theory, be a CDU/SPD coalition. However, at the time of writing, both Laschet and SPD leader Olaf Scholz are claiming that they will be able to form a government, and a three way coalition made up of one of the main parties, the Greens, who were third placed and the pro-business Free Democrats (who came fourth), looks much more likely.

Like other major economies around the world, Germany is suffering supply chain problems and shortages in the wake of the pandemic. What it emphatically does not need is a prolonged period of paralysis while a new Government is formed.

Germany is also facing worries about inflation, and demand for gold coins and gold bars in the country has reached its highest level since 2009. According to the World Gold Council, demand for coins and bars in Germany was up by 35% in the first half of the year, compared to a rise of 20% for the rest of the world.

While Germany was preparing to go to the polls, Europe as a whole, was reacting to the AUKUS submarine deal, with France predictably outraged. It now looks likely, that any trade deal between the EU and Australia, will not happen until after the next French elections, due to be held in April next year.

The EU unveiled a new strategy for boosting economic, political and defence ties in the Indo-Pacific region in the immediate aftermath of the AUKUS deal. The ambitious aims of the strategy encompass climate change and healthcare issues, as well as economic ones.

A negative end to the month on Europe’s major stock markets in September. The German DAX index was down 4% to close at 15,261, the French stock market fell back 2% to end the month at 6,520.


The US, like every major economy, has had its share of good and bad news as it recovers from the pandemic. However, is the bad news starting to outweigh the good?

The month began with disappointing news on employment, with the US economy adding just 235,000 jobs in August, well down on the 1.05 million created in July. The unemployment rate did fall, from 5.4% to 5.2% but the jobs figures, combined with a decline in consumer confidence, prompted several banks to cut their forecasts for US GDP growth in the third quarter. Morgan Stanley did not so much cut their forecast as slash it, reducing it to 2.9% from a previous 6.5%. Goldman Sachs cut its forecast from 5.5% to 3.5%.

The other worry for the US, which it shares with every major economy at the moment, is inflation. Prices rose again in August to take consumer price inflation on a year-on-year basis up to 5.3%.

Nevertheless, there was some good news. The US manufacturing sector strengthened, largely driven by an increase in new orders. The Purchasing Managers’ Index rose from 59.5 in July to 59.9 in August. The housing sector remained strong, with one index measuring US house prices, showing a 19.1% annual increase in June 2021.

The US Federal Reserve was certainly optimistic, saying in a statement that the US economy was continuing to strengthen, that the jobs market was improving and explaining high levels of inflation as transitory. In the accompanying press conference, Jerome Powell, Chairman of the Federal Reserve, gave a clear indication that the central bank would start to reduce its economic stimulus measures later this year.

None of the above, of course, mattered to the good ship Amazon, which continued to sail merrily along. September brought the news that it would need to recruit another fifty-five thousand people, to add to the 1.3m it already employs worldwide. This figure is roughly equivalent to the population of Estonia!

In stark contrast, old economy companies were suffering, with GM announcing that it would halt production at most of its US plants in September, as the shortage of semiconductor chips continued to hit carmakers. Ford and Toyota also reduced production during the month.

Turning to Wall Street, the Dow Jones index fell 4% to end the month at 33,844. While the more broadly-based S&P 500 index fared slightly worse, dropping 5% to 4,308.

Far East

There has been so much news in the Far Eastern section of the Bulletin this month, especially with regard to China, that it is difficult to know where to start.

Perhaps the most appropriate place is at the end of the month, when Goldman Sachs became the latest bank to cut its growth forecast for China, as the country continues to struggle with energy shortages. Having previously forecast that the Chinese economy would grow by 8.2% this year, the bank is now forecasting growth of 7.8% following estimates that up to 44% of China’s industrial activity, has been adversely affected.

Perhaps even more significantly, the bank is forecasting zero growth for the third quarter, citing increased regulation, tight global energy supply, surging coal prices and a crackdown on carbon. China’s factory gate inflation is the highest it has been for thirteen years, due to a shortage of raw materials.

The other major story was Evergrande, the Chinese property company, which was ranked the most valuable real estate company in the world in 2018. It now has hundreds of billions of dollars of debt and, according to one source, owes money to one hundred and seventy-one domestic banks and one hundred and twenty-one other financial firms.

There are real worries as to whether Evergrande will be able to meet its debt repayments. Will the company be bailed out by the Chinese government? Is it too big to fail? We may not have to wait long to find out, as by the end of the month Evergrande was selling assets to meet debt repayments, and reportedly missed a payment of £35m to foreign bondholders, due on the 29th. Angry investors in the company have apparently moved on from simply protesting outside the company’s headquarters, to taking senior management hostage. One executive in the south eastern province of Jiangxi was blockaded in his office by three hundred protesting investors. They were described by one publication as having gone “full pitchfork.”

More worryingly, perhaps, bankers UBS estimate that there are ten property developers in China with combined debt nearly three times the size of Evergrande.

In previous Bulletins this year, we reported on the restrictions and crackdowns imposed by the Chinese Authorities. During September these continued, as the country’s National Radio and Television Administration, trained its sights on the supposed vulgar influencers, as they pursued Xi Jinping’s stated goal of common prosperity. The general clampdown on online games, and the time spent playing them continued too.

At the end of the month, China’s central bank made the move it seemed to have been edging towards for some time, when it announced that all transactions of cryptocurrencies, such as Bitcoin, would be illegal. The bank explained that such transactions,” seriously endangered the safety of the people’s assets.”

We have commented above on the UK’s continuing application to join the CPTPP. The day after the UK, the US and Australia announced the AUKUS pact, China duly applied to join the CPTPP. A move which many analysts saw as a bid to leave the US increasingly isolated on the world stage.

September proved to be a very mixed month for the region’s stock markets. The Japanese Nikkei Dow index was up 5% to end the month at 29,453. China’s Shanghai Composite index managed a gain of just 1% to 3,568 while the South Korean market went in the opposite direction, falling 4% to 3,069. Hong Kong’s Hang Seng index seemed to bear the brunt of the worries about Evergrande, and the possible slowdown in China, falling 5% in the month to close at 24,576.

Emerging Markets

September was an unusually busy month for news in the Emerging Markets section of the Bulletin. El Salvador, not a country we have previously covered, became the first country in the world to accept the cryptocurrency Bitcoin as legal tender.

As we reported above, China has now made cryptocurrency transactions illegal as it trials a digital yuan. However, it may well be that smaller currencies opt to go down the Bitcoin route, with Ukraine expected to make it legal tender by 2023.

Despite a second wave of the pandemic, the Indian economy rebounded sharply, with figures for the three months to June showing growth of 20.1%, compared to a drop of 24% in the same period last year.

Elections were held in Russia, with United Russia, the party that supports Vladimir Putin, winning 315 out of 450 seats in the Duma. No surprise there, but what was striking was the very low turnout in the election, with many constituencies having turnout well below 40%.

The month ended with the BBC reporting that Afghanistan’s banking system was close to collapse, with international aid to the country having dried up since the Taliban seized power.

On the stock markets, September was a good month for both the Russian and Indian markets. Russia’s stock exchange rose 5% to close at 4,104, while the market in India was up 3% to 59,126. The Brazilian stock market went sharply in the opposite direction, ending the month down 7% at 110,979.

And finally

You may well remember Ever Given, the giant container ship, which blocked the Suez Canal for six days earlier this year, and was subsequently blamed for all manner of shortages, including garden gnomes.

Now comes news of a fully autonomous ship, based in Japan, which is about to face its first real test as it sets out on a 236 mile journey. Ultimately, Japan hopes that half of its ships will be piloting themselves. Clients may remember the fully autonomous security guard robot, which drowned itself in a fountain. Or the hotel which replaced those irritating, unreliable staff with robot waiters, and had to hastily backtrack. Fully autonomous ships roaming the world’s oceans, what could possibly go wrong?

September was unquestionably robot month. Amazon launched Astro, the home robot. Or, as it has already been dubbed, “Alexa with wheels.” Staying on the subject, there is good news for any reader whose football team may not have made the best start to the current season. Founded by a group of robotics scientists, the Robot Soccer World Cup, otherwise known as the RoboCup, has set itself an ambitious target. The aim is that by the middle of the century a team of robot footballers will beat the most recent winners of the real World Cup.