In recent days the warning lights for the global economy have started flashing red. Yesterday it was revealed that China’s industrial output is growing at the slowest pace in 17 years, while the powerhouse of Europe's economy – Germany – is facing recession.
Financial markets have been further spooked by the inversion of the ‘yield curve’ in the US and the UK, which means that the cost of government borrowing for longer term bonds has become cheaper than for short term bonds.
Historically this has served as an accurate predictor of a looming recession: an inverted yield curve has preceded every US recession for the past 45 years. These developments confirm what many economists have long feared – that another crisis could be just around the corner.
