UK rate decision, results at Google owner Alphabet, Pope visits UAE
Josh de la Mare previews stories the FT is watching in the week ahead, including the Bank of England's meeting on interest rates as Brexit dominates debate, results at Google owner Alphabet and the visit by Pope Francis to the United Arab Emirates
Written by Abbie Cheeseman, Simon Greaves, Tim Bradshaw, Chris Giles, Claire Jones. Filmed by Petros Gioumpasis and Rod Fitzgerald. Produced by Josh de la Mare
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Here are the top stories we'll be watching this week. All eyes will be on the Bank of England's meeting on interest rates against the backdrop of Brexit. EU forecasts will reveal more about the slowing eurozone economy. Google's own Alphabet brings out its latest figures, and investors will be focused on YouTube's fortunes. And Pope Francis makes the first trip by the head of the Catholic church to the Arabian peninsula when he visits the United Arab Emirates.
First to the UK and rate decision time. Brexit dominates all political and economic debate in Britain at the moment, with a looming deadline of March 29 for leaving the EU. In these circumstances, the Bank of England is all but guaranteed to leave interest rates unchanged at 0.75 per cent when it next announces its decision this Thursday. The interest in the bank's meeting is whether the Governor Mark Carney gives any hints about the balance of thinking on his monetary policy committee if Brexit uncertainties disappear over the next three months.
You've got on the horizon the big Brexit deadline of the 29th of March this year when, if nothing else happens, Britain crashes out of the EU. Now if that were to happen, I think that'll be one thing on the Bank of England's mind. What would they then do? They've put out a whole bunch of documents suggesting that they might even have to raise interest rates if the pound plummeted and inflation went up very strongly.
But I think it's much more likely to be the case that, if we did crash out, then they would cut interest rates quite quickly back to 0.5 per cent or even 0.25 per cent to try and give the economy a little bit of a boost at a difficult time. But they don't want to be talking about this at all. They want to be talking about what they would do if there's a transition deal and there's a smooth path for the UK economy.
And then they really want to be thinking about when the next rise in interest rates is going to be. With wages and the employment market doing very well, they'd want that to be sooner rather than later. But there's so much uncertainty in the UK at the moment that no one really thinks they're likely to raise interest rates until the back end of this year, probably November.
Feeding into the bank's analysis will be the state of the eurozone economy. The European Commission publishes its latest quarterly forecast for the area also on Thursday. The single currency zone has hit a rough patch with growth slowing dramatically in the second half of last year, to its slowest pace in more than four years.
The eurozone economy is not looking in good shape. We saw some weaknesses in the second half of last year. And, at the time, people thought those weaknesses were a temporary blip. But it seems they're going to be more prolonged than initially thought. That has forced the European Central Bank in recent weeks to downgrade its economic outlook for the coming years. It says the risks to growth are no longer broadly balanced, but instead they're tilted towards the downside.
Most of the weakness is on the back of political uncertainty, which is affecting things in the global economy. It's making investors more cautious, for instance. What we should get a sense of this week is the degree to which the concerns of the ECB are concerned by officials in Brussels when the European Commission produces its economic projections on Thursday.
Over to the US now, where tech giant Alphabet - owner of Google and YouTube - reports its fourth-quarter results on Monday. And the big question for investors is whether Alphabet can sustain its revenue growth rate. Wall Street panicked in October last year when it reported a deceleration in Google's advertising sales, contributing to the broader sell-off among tech stocks in the latter part of 2018, from which Alphabet shares are yet to fully recover.
We've seen research showing that YouTube audiences are growing, and that they're spending more time watching videos there, at the same time that Facebook is declining in many areas. And YouTube has been a somewhat patchy area for advertising growth over the last couple of years. We had a big panic back in 2017 over brand safety. And a lot of big advertisers pulled out because they're worried about their advertising being shown against unsavoury or unsafe videos.
That has started to change. And a particular sign of that, we saw AT&T, one of the big US mobile operators, return to YouTube this month after almost two years away. Counterbalancing that is Amazon, which is pushing very hard into the advertising business that has traditionally been Google's bread and butter. And so the tension there is, as the big advertisers get bigger in the online advertising world, whether Google can hold onto its place at the top of the pile.
And in the Middle East, Pope Francis makes the first visit by a head of the Catholic church to the Arabian peninsula when he goes to the United Arab Emirates. Pope Francis visits UAE's capital Abu Dhabi this week at the invitation of the Emirati crown prince, part of a broad approach to show more openness towards Christianity, and promote a more tolerant image of Islam.
The pontiff has been keen to open up to other religions since his election in 2013, with this trip marking his seventh visit to a predominantly Muslim country in pursuit of inter-religious peace.
And that's what the week ahead looks like from the Financial Times in London.