Media Tel Year Ahead Jan 8, 2020. Preso given at Waldorf Hotel, London. More of a curation in fact. Economies, markets, media, outlook.

1. YEAR AHEAD 2020
ALEX DE GROOTE / MEDIATEL JAN 2020

2. OVERVIEW OF ECONOMIES AND MARKETS
….. WHAT WE ARE LOOKING FOR
■ Global economy to show signs of modest recovery in 2020/1 to around 3% yoy
■ UK and Euro Area to remain below par, at around 1% growth
■ Major structural challenges:Climate change;Trade; Geopolitics; Digital
■ BUT government monetary policy remaining loose / supportive
■ LEADING to ongoing asset price inflation …. AND markets still very robust
■ WithYET more innovation in MediaTech changing the shape of the world economy….
■ 2020:A big year for the USA. US Presidential election … runners and riders – thanks
Betfair

3. GLOBAL GDP GROWTH IN % REALTERMS

4. KEY POINTS ON GLOBAL ECONOMY
■ GDP is the single most important indicator to capture all economic activity
■ For past two years, global growth outcomes have deteriorated, amidst persistent
policy uncertainty and weak trade/ investment flows.OECD estimate global GDP
growth to have been 2.9% in 2019. Forecasts it to remain around 3% for 2020-21.
■ Short-term country prospects vary with the importance of trade for each economy.
GDP growth in USA is expected to slow to 2% by 2021, while growth in Japan and euro
area is expected to be c0.7 and 1.2% respectively. China’s growth continue to edge
down, to c5.5% by 2021. India is world’s highest growth economy.
■ Other emerging-market economies are expected to recover only modestly, amidst
imbalances in many of them. Overall, ‘growth rates are below potential’.
■ Big structural issues: 1/ Climate change; 2/ digitalisation are ongoing structural
changes for our economies. In addition, 3/ trade and 4/ geopolitics are moving away
from the multilateral order of the 1990s.
■ Middle East / Iran ?
■ In mature economies, monetary and fiscal policy remains loose.

5. UK GDP GROWTH IN % REALTERMS

6. KEY POINTS ON UK ECONOMY
■ UK GDP growth has been on declining trajectory for almost 5 years.
■ The economic outlook is unusually uncertain given the risks around exit from the European
Union.The UK economy is also exposed to global financial risks, a further slowdown in the
world economy and rising protectionism
■ Assuming a smooth transition ending after 2021, activity should grow c1% in the near term.
Brexit-related uncertainty may holding back investment until there is clarity about future
trading arrangements. Weak-ish global economic prospects may slow the recovery in
exports.
■ Inflation is projected to slow to below 2%.Therefore monetary policy should continue to
support activity and keep inflation close to target. E.g interest rates to remain low.
Government likely to intervene to address any Brexit-related disruption or a weakening of
economic growth.
■ Government already announced a significant increase in spending for the fiscal year 2020-
21 in the Spending Round, set to add around 0.2 percentage point to growth.The
government has also signalled future tax cuts and additional spending increases

7. Real GDP forecast - Annual growth rate (%), 2021 or latest
available

8. GDP PER CAPITA

11. Boris Bounce ? Everyone has a view ….
■ BEAR:We are unlikely to see a Boris bounce in 2020 because that mirage depends largely
on there being only positive benefits from ending the uncertainty
■ BULL:Yes, we see a modest improvement in growth, felt largely through the near-term
impact on business investment, thanks to the election result and the reduction in
uncertainty (especially around the possibility of a hard Brexit)
■ LIGHT BULL: More of a “Boris sigh” (of relief), that no-deal is off the agenda — for 2020,
at least.There is likely some pent-up business investment demand that has been held
back by the uncertainty over the past few years
■ SITTING ONTHE FENCE:The definitive election result should support business and
consumer confidence to some extent in Q1, helping the UK avoid recession. But Brexit
“cliff-edge” fears will persist and businesses will remain in the dark about the content of
any future trade deal with the EU
■ LIGHT BULL:With a sizeable majority in parliament, Boris can now deliver whatever form
of Brexit he negotiates with the EU. Brexit uncertainty has, therefore, declined.The fiscal
stimulus that has been promised will also help to increase aggregate demand.We are,
therefore, likely to see a “Boris honeymoon” involving increased public spending, lower
taxes and a stronger sterling during 2020

12. BUTWHAT, IF ANY, EVIDENCETO DATE ? IT IS
STILL EARLY DAYS (I)

13. Survey data since the UK election….
■ IHS Markit and the Chartered Institute of
Procurement and Supply (Cips) found that
business optimism soared to the highest
level since September 2018
■ The survey of about 650 service sector
companies straddled the election, with
firms responding between 5 Dec and 19
Dec, suggesting the unexpectedly decisive
result may have influenced business
optimism
■ Business confidence in the British economy
has leaped to its highest level for more
than three years following the
Conservatives’ election win, according to a
survey of company directors.
■ For the first time since spring 2018, firms
have become optimistic about the
economic outlook, with a key confidence
measure swinging into positive territory
and hitting 21% in December, up from -18%
in November
■ The IoD’s main confidence measure –
which is the net balance of those firms that
are optimistic minus those that are
pessimistic – had been negative for more
than 18 months.

14. ATTHE BEGINNING OF A NEW DECADE
MARKETS AND ASSETS ARE AT ALLTIME HIGHS
…
Quantitative easing creating more credit for the banks,
there is a steady increase of liquidity into stock markets.
Stocks are rising since sovereign debt derivatives are
losing money
Is there a rational explanation for the contradiction
that world stock markets are so strong, whilst the
world economy is quite weak?
The US stock market’s valuation is already at its highest
in history, surpassing the peaks of 1929, 1937 and
1999/2000

15. ASSET
GROWTH:
BOOMING
STOCK
MARKETS (I)

16. ASSET
GROWTH:
BOOMING
STOCK
MARKETS (II)

17. ASSET
GROWTH:
GOLD PRICE

18. RECORDVC
INVESTMENT
… THOUGH
EUROPE STILL
LAGS

19. ASSET
GROWTH:
BIGTECH
VALUATIONS

20. Lots of M&A activity (since Brexit) …
including UK Media being taken over

21. GLOBAL
ADVERTISING:
2010S =
A DECADE OF
UNINTERRUPTE
D GROWTH …

22. AND A PERIOD OF
STAGGERINGTECH
INNOVATION

23. Sources
■ OECD
■ Guardian
■ FT
■ Simon French
■ MediaTel
■ Statista
■ DeGroote Consulting