It’s nearly that time of year again: the time to reflect and take stock of the year just passed. My excuse for getting in early is twofold: first, an impending holiday; second, the likelihood that nothing much will happen between now and December 31 to change the economic landscape.

This year has had its fair share of surprises, perhaps most importantly, the further falls in oil prices and continued softness of other commodities. Of course, the weakness of oil prices had begun before the start of the year, but the sheer extent of the fall since mid-2014 has caught almost all observers by surprise.

Even more surprising has been the apparently negative effect on the world economy. If you had told us two years ago, or even one year ago, that oil would fall below $40 a barrel, most economists would have said that this would be extremely bullish for the world economy. As it is, each new phase of oil and commodity price weakness seems to have led to stock market losses and renewed bearishness about the world economy.

In various columns over the past year I have tried to set out the reasons for this apparent paradox: the losses from lower oil prices were more concentrated than the gains, which are spread thinly throughout the world economy, and hence the immediate response of the losers has been stronger. Accordingly, the overall result across the world was a hit to both consumption and investment.

David Fuller's view

Here is a PDF of Roger Bootle's article.