The world economy will expand by just 3.3 per cent this year, says the National Institute of Economic and Social Research. Global markets remain vulnerable to shocks in confidence or sentiment this year.

The main reason is the US’ trade battle with China. The US has imposed tariffs on Chinese goods, and China has responded in kind by targeting US exports. As well as reducing trade between the two countries, this has also damaged confidence and made companies worldwide more wary. Other problems include a surge in oil prices.

When oil prices rise, the economy takes a hit because firms and consumers have to pay more for the fuel and therefore have less cash to spend elsewhere. The European car market has stumbled, too, with sales slumping 7.9 per cent in June compared to a year earlier. Huge numbers of customers are abandoning diesel due to fears over the amount of pollution it causes. Car manufacturing is hugely important to the European economy. The damage done has been felt particularly keenly in Germany, where growth is expected to be just 0.5 per cent this year. In the developing world, the collapse of Venezuela's economy and a currency crisis in Turkey have also caused damage.