A retrospective perspective: how the global economy has changed in 35 years

LOOKING back on my career at Schroders, I wanted to focus on three themes that played a major role in driving economies and markets over the last 35 years. The first is a big one that ran through the entire period and may now have come to an end; the second is one that started as an economic trend but has become more geopolitical; and the third is an old theme that has challenged economies for decades.

These three themes are the great disinflation, the rise of China, and the rise and rise of government debt. There are other trends, but these three have been the most important in my view, and have often been at the root of the crises we have experienced over the period. How they play out will be key to the outlook for the next 35 years.

Theme 1: The great disinflation

In 1988, when I started as a UK economist at Schroders, the inflation rate in the UK had just risen above 6 per cent, the highest for six years, and interest rates were high and rising. The economic debate was on how inflation had managed to come back after the deep recession of the early 1980s, when three million people became unemployed. The market debate was on how far monetary policy would be tightened to tame inflation.