Daily Market Roundup: Low productivity a problem for all advanced nations - Panmure Gordon

A day after the Bank of England (BOE) chief Mark Carney warned about negative economic impact of Brexit, the latest poll showed a sharp rise in "undecided vote". When quipped about the same on the Tip TV finance show, Panmure Gordon's Chief Economist Simon French explained that there are lot of doubts and scepticism regarding impact of Brexit on consumer's finances which is forcing people to think about the status quo – which is "remain" vote in this case.

French also talked about problem of low productivity being a universal one, especially in the advanced world and mentioned low interest rates as one of the key reason. He argued that productivity destruction is due to Zombie firms who have easy access to funds due to record low rates. The argument is somewhat in line with the Austrian school of thought, which says low rates, cheap finance and record stock prices actually discourages innovation.

While talking about Kuroda's take on QE, French noted that BOJ needs to take a note of what Fed does and there is an interesting faceoff developing between Fed, BOJ and ECB.

On negative rates, French said ECB's deposit rate can go further down in the negative territory, however, the outflow of money from banks that most expected after rates hit negative territory has not really happened.

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