Inflation Ripples

Ludo Lugnani
Ludo Lugnani

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Must-Know this week

  • 📉 Both Japan and the UK slipped into recession as 2023 ended. Japan's economy shrank, bumping it to the world's fourth-largest, while the UK saw a 0.3% GDP dip in Q4.
  • 💰Mohammed Zina, an ex-Goldman Sachs analyst, has been jailed for 22 months after making trades in his sister's (ex-Clifford Chance lawyer) name.
  • 👩‍💼 Wheatley MacNamara has been named the first female London managing partner of Simpson Thacher & Bartlett, a private equity heavyweight.
  • 📺 Amazon Prime's Ad Controversy: A class-action lawsuit targets Amazon for sneaking ads into its Prime video service, charging extra for the previously ad-free experience, adding to Amazon's legal challenges with the FTC in the US over Prime's signup practices.

In Case You Missed It

  • We covered the top court cases of 2024, plus how you can discuss them in applications and interviews. Includes a Vatican property deal gone south, and COVID-19 patent dispute (read it now).
  • The UK faces a critical housing shortage, with projections indicating a shortfall of nearly 100,000 homes annually, exacerbating the affordability crisis (read it now).
  • The US and EU are considering joining forces to secure critical minerals to strengthen their position against China's dominance in the sector (read it now).
  • Disney, Fox, and Warner Bros Discovery are joining forces to create a streaming platform for sports, potentially revolutionising how Americans watch their favourite games (read it now).

This Week's Story

Inflation has been the word of the week with updates from the UK, US, Argentina, and the EU presenting a mixed picture, and contrasting strategies.

What happened?

  • 🇬🇧 The surprise steadiness of inflation at 4% suggests the Bank of England's cautious approach might be paying off, despite pressures from rising wages and economic resilience.
  • 🇺🇸 In January, the US saw inflation cool off to 3.1%, but that was still higher than expected.
  • 🇦🇷 Argentina's inflation hit a staggering 254% in January, leaping from 211% in December.
  • 🇪🇺 The European Commission revised its growth forecasts but cautiously expects inflation to drop.

What does this mean?

Inflation's been playing tricks again, not just here in the UK but around the globe. The UK had a bit of a mixed bag situation. On one hand, pay checks got a bit plumper than anticipated, which sounds great until you realise it might just fan the flames of inflation, making the Bank of England scratch their heads over interest rates.

But it's not all doom and gloom. The UK's inflation decided to play nice in January, raising trader expectations for a summer rate cut by the BoE, especially in light of recent data pointing to an economic downturn, marking the slowest annual growth since the financial crisis.

Inflation is like when your favorite chocolate bar gets smaller or its price goes up, but your pocket money stays the same. You end up getting less chocolate for the same amount of money, or you have to spend more to enjoy what you used to. This happens with everything, not just chocolate, making it harder to buy what you need or want because your money doesn't go as far as it used to.

Over in the US, January threw a curveball with prices climbing a tad more than everyone thought they would. It's like going for a coffee and finding out your favourite latte now costs more than you expected. And the main culprit? Those ever-climbing housing costs that just don't seem to cool down.

In Argentina, President Javier Milei's "shock therapy" involves bold steps like devaluing the peso by 54% to make exports cheaper (although that can also bump import prices), slashing energy and transport subsidies, and hiking fuel taxes.

On the flip side, the EU is a tale of cautious optimism. Growth forecasts took a slight hit, thanks to high interest rates, but inflation's expected to halve from last year's highs.

How does this impact Law Firms?

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