Back to reality: Should we be worried about an economic ‘hurricane’ approaching?

‘When America sneezes, the world catches a cold’ – a US recession would certainly send shivers across Europe, including the UK, writes Hamish McRae

Can the central banks tighten credit without causing a financial crash? (Getty/iStock)

It is back to work. After four days of jubilee celebrations, people in the UK will be coming back to reality with a bump. The party’s over. What next?

There are several economic stories that threaten to get worse before they get better. One is travel disruption. This is most evident at UK airports, where flights have been cancelled and baggage has piled up. This is not simply a UK problem, however, for flights are being cancelled across America and Europe. KLM cancelled all European flights out of Schiphol on Saturday, citing crowds at the airport. Dublin airport seems to have managed to get back to normal after chaos a week ago. Nevertheless, it does seem that the UK is suffering more seriously than many other countries.

Another is the string of negative stories coming out of the high-tech companies in the US. It is a drip, drip of cutbacks. Elon Musk said he has a “super bad feeling” about the economy and wants to cut back staff at Tesla by 10 per cent. Netflix and Meta (parent of Facebook) have brought in hiring freezes. Even Amazon is reportedly cutting back.