Next Dispatch in:

Shopping Basket is Empty

You have no items in your shopping basket.

Click here to continue shopping.

What Might China’s Falling Stock Market Mean for the UK? Part 2.

This is part two of our examination of the impacts that a slowdown in the Chinese economy could have on the UK. In part one we looked at what impact it might have on housing, so join us as we check in on interest rates, manufacturing and more.

Interest Rates

Before the Chinese market took its tumble, debate had been heating up over whether Mark Carney and his merry band of policymakers would lift the UK from its historically low interest rate of 0.5%, with popular thought suggesting that the rates might be increased in the first quarter of 2015. This latest turmoil in china may force the Bank of England into deeper thought though, as the global economic output doesn’t look as rosy as it did just a couple of months ago.

Although Governor Mark Carney spoke last month on the issue of Chinese turmoil and its effect on UK interest rates, saying “Developments in China are unlikely to change the process of rate increases from limited and gradual to infinitesimal and inert.” But with global growth looking more uncertain and cheaper commodities keeping inflation low, the Bank might still decide that it’s not yet time to increase interest rates after all.

Pensions and shares

UK shares, like many world markets, have been hit by the dramatic swings on China’s exchanges. Almost £74 billion was wiped off the FTSE 100 on the worst day last week as it tumbled 4.7% in the wake of Black Friday. By the end of the week though, it’d recovered its losses and was buoyed by the brighter economic news coming from the US and some convincing emergency measures put into place by Chinese policymakers. Still, August was the worst month since May 2012 for the FTSE, losing 6.7% overall. Financial experts are advising pension savers with money in shares not to worry about short term volatility, but the real question is what long term returns look like.

There are a couple of factors at play in the FTSE’s ups and downs. First, there’s the level of risk investors attach to shares in general. As sharp falls in Chinese stocks shook investors nerves around the world, many investors got rid of their more risky shares in favour of solid options like gold or government bonds. Many analysts think equities are likely to remain an attractive investment as the global economy slowly recovers and should remain attractive as long as yields on assets such as bonds remain low and commodity prices stay above recent lows.

The second factor on the FRSE is the importance of mining and energy-company shares in the index. If China requires less iron ore, oil and copper, shares could hit a low and damage the market further.


Confidence has been shaken in the UK’s European trading partners, and so many businesses have been looking to China for opportunities over the last few years. With China now looking a more uncertain prospect, the British Chambers of Commerce have warned that it could be felt in some way in the UK. Furthermore, many British companies in supply chains could be affected if China’s ability to trade in the volume it does is compromised. Our exposure at Custom Fittings is minimal.

At the moment, China is a relatively small part of the UK’s export business, accounting for less than 5% of UK exports. There would be a slowdown of sales in luxury cars and consumer goods, which the UK is somewhat renowned for. Perhaps the greater danger is the way businesses in the UK are perceiving the threat from the Chinese market fall, with almost half of all companies polled by the EEF said they were concerned about a possible sharp slowdown in China. That sort of fear might hold back UK businesses from investing in themselves and expanding their reach globally. Part of the UK’s good growth has been from businesses investing in themselves once again, and losing that would indeed damage the UK.

Customer Reviews

"Custom Fittings are a 1st tier supplier to GS Hydro for stainless steel high and low pressure hydraulic components. For over 20 years Custom Fittings have been our preferred supplier due to the high ..." Chris Hargreaves, Managing Director - GS Hydro UK

We have been using Custom Fittings for many years now, they offer fantastic customer service as well as top of the range products. We could not recommend them more highly and will continue to use them..." James Tidy, Director - Tidyco Ltd

"Custom Fittings have been the number one supplier for stainless steel fittings to Fluid Power Services for over 25 years now.In the early years our requirements were for standard off the shelf parts ..." Anthony Smith, Sales Director - Fluid Power Services Ltd

Custom Fittings provide us with a fast, efficient supply of top quality Stainless Steel fittings and valuable assistance with problem solving and special order parts." Colin Leonard, British Aerospace Engineer

SSL Certificate
Paypal Logo Visa Logo Maestro Logo Mastercard Logo American Express Logo