Brexit and world growth – what are the risks?

• The initial global market reaction to the UK Brexit vote was very negative and in our view overdone. Nevertheless, we expect the uncertainty to linger for a while, with the vote having refocused investors on existing vulnerabilities in the world economy. Our new forecasts see the main negative impacts on growth being in the UK, the Eurozone and Japan. Risks to our new forecasts remain skewed to the downside, with a significant danger of world growth dropping below 2% this year.
• Our new forecasts see UK growth dropping to 1.4% a year in 2017–18, down from 2.2–2.3% a year before. In the Eurozone, growth will be around 0.2% a year weaker in 2017–18 and Japan is also a loser as a result of the risk aversion‐driven stronger yen, with growth at just 0.3% in 2017 from 0.5%.
• The size of the initial global market sell‐off makes no sense in the context of the likely impact from a weaker UK. In part, it seems to have reflected the pricing in of very negative scenarios in the Eurozone. But investors may also be worrying about other global problems glossed over in recent months.
• One risk to our forecast is that confidence effects on businesses and consumers are larger than we expect – but such effects are often overstated. Another danger is that more of the recent financial market weakness will ‘stick’ than our new baseline forecasts assume.
• Our world recession indicator is already at elevated levels and suggests a significant danger of world growth slipping below 2% this year; not a recession, but it might feel like one. Global policymakers need to act quickly to head off the risks.

     

Does the information content of payout initiations and omissions influence firm risks?

We study the influence on firm risks of NASDAQ and NYSE firm payout initiations and omissions. These payout events can be interpreted as managerial signals of firm financial life-cycle maturation resulting in concomitant changes in firm risks. We remove confounding payout types and we match on the propensity to initiate or omit informed by determinants of payout known to investors in advance. For payout event and matched firms, we apply the difference-in-differences method to estimate the effect of the information content of actual initiations and omissions on firm risks. We find consistent significant declines in total, aggregate systematic, and idiosyncratic firm risks after cash dividend initiations and increases after dividend omissions, but only incidentally after share repurchase initiations and omissions.     

Health and safety risks in Britain's workplaces: where are they and who controls them?

This is the first paper to identify the correlates of workplace managers' perceptions of the health and safety risks faced by workers and the degree to which workers have control over those risks. The risks that workers face and the control they have over those risks are weakly negatively correlated. Managerial risk ratings are positively associated with both injury and illness rates, but not with absence rates. The control rating is also positively associated with injury and illness rates, but it is negatively correlated with absence rates. Workers are more likely to be exposed to health and safety risks when their workplace is performing poorly and where it has been adversely affected by the recession. Union density is positively associated with risks but is not associated with workers' control over risks. Having on‐site worker representatives dealing with health and safety is linked to lower risks than direct consultation between management and employees over health and safety. However, there is no evidence that particular types of health and safety arrangement are related to workers' control over health and safety risks.