Of course, it is not just here that investors have been jittery. Wall Street, which did achieve new highs this summer, has also retraced, while markets around the world have seen sentiment turn negative in the face of a dismal set of potential upsets. Geo-political issues, a deteriorating economic outlook in Europe and the likely effects of the Ebola outbreak have combined to send a shiver of concern over global economic growth prospects.
While Ebola’s influence is largely confined to African countries at present, which contribute relatively little to the global economic picture, there is little doubt that it is having an adverse effect. Growth in the once buoyant nations of western Africa has stumbled. This may have little direct consequences for the UK, but continental Europe, our largest trading partner, will impact on our economic fortunes if, as feared, there is a further downturn in activity.
So economic worries have accomplished what conflicts around the world have failed to do – a pause in the momentum of markets. Naturally, worries over an increasingly difficult situation in Syria and Iraq and the seemingly insoluble issues surrounding Russia and Ukraine hardly help, but it is the increasing focus on where the globa l economy is headed that has sent investors scurrying for cover.
As for the future, it is as opaque as ever. While Ebola – as important as it is – may turn out to be a short term economic concern, Europe remains a worry. The fact that Chancellor George Osborne has warned that we are not immune from their problems underscores the concerns markets are reacting to. Sterling has also taken a hit on lower than expected inflation figures which suggest interest rate rises may be further away than we thought. Still, we need to keep an eye on the other side of the Channel for a while.