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The 15 charts that defined the global economy in 2017

In markets, often the best way to illustrate what's going on is with a chart. Charts are great ways of simply explaining fiendishly difficult concepts.

LONDON – For the financial markets and the global economy, 2017 has been a pretty good year.

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All the major fears about 2017 that dominated the latter stages of 2016 — a market crash in the event of a Trump presidency, a Brexit-triggered recession in the UK, and a collapse of the eurozone following the implosion of the Italian banking system — have failed to materialise.

The economic story of the year has largely been one of positive growth and rising stocks.

That's not to say, however, that 2017 has been dull or incident free. To name but a few major talking points, we've had the Federal Reserve continuing their tightening cycle, the Bank of England raising interest rates for the first time in more than 10 years, and the unstoppable surge of bitcoin.

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In markets, often the best way to illustrate what's going on is with a chart. Charts are great ways of simply explaining fiendishly difficult concepts, and can paint a much clearer picture than words much of the time.

As such, as we approach the year's end, Business Insider decided to round up a selection of the charts that we feel define what went on in the world economy in 2017. Time to take a look back.

The Bank of England hikes interest rates

The BoE aggressively cut interest rates during the 2007-2009 period in order to cope with the shock brought to the British economy by the global financial crisis, but remained on hold for more than seven years after that. Between 2009 and August 2016 the base rate stayed at 0.5%.

It then dropped to 0.25% after the bank's emergency cut in August, which intended to soothe the economy in the immediate aftermath of June's Brexit vote.

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Just over a year after that cut, the bank took a step it hadn't made in more than ten years by raising rates. Sure, it wasn't a big move, taking the base rate back to 0.5%, but it was significant.

That is especially true as the Monetary Policy Committee signalled strongly that it will look to increase rates further going forward should the UK economy stay reasonably strong in the face of Brexit.

However, while the BoE's first hike in a decade is a step towards normalising monetary policy, there is still a very long way for the bank to go, and it will likely be some years (if ever) before we see interest rates back to levels seen before the crisis.

Bitcoin goes bananas

Perhaps the biggest financial story of the year is the meteoric rise of bitcoin. Sure, the cryptocurrency has been around since 2009, but 2017 marked the year when it really came into the mainstream.

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On January 1, bitcoin was trading at $908 per coin. Fast forward just less than 12 months, and the price of a single bitcoin is now in excess of $16,000 as investors from around the world speculatively pour money into the asset.

Bitcoin has caused a big divide between more traditional financial institutions and players — a large proportion of whom see bitcoin as pointless and worthless — and those who believe that cryptocurrencies, and the blockchain technology that underlies them, will change the way the global economy works forever.

Exchange Traded Funds are on fire

Banks get ready to move staff out of the City of London post-Brexit

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2017 could well go down as the year in which the City of London lost its mojo as the centre of gravity of European finance.

With Brexit looming, major financial institutions are making plans to shift staff out of London and the wider UK once Britain leaves the European Union in March 2019.

Some announcements about staff shifts had been trailed late in 2016, but 2017 is the year that banks started to take action.

The chart above shows the possible scale of the job moves that could result from Brexit, as Britain loses single market access, and thus its financial passporting rights.

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UBS shows us how tricky things will get for central banks in the next financial crisis

The striking chart above shows how low global central banks would have to cut interest rates to deal with a new financial crisis. The g

Writing in its Global Economic Outlook for 2018-2019, a 223-page epic report, the bank argued that global rates remain so low 10 years on from the crisis, that the next major global correction could leave central banks scrambling for ways to stimulate the economy.

Pointing to the above chart, the banks economists note that global central banks, if they needed to respond as robustly as they did during the 2007-08 crisis, would be forced to drop interest rates as low as -5%. That is quite simply something that has never happened before.

"If the recession were to come today, we'd be in trouble, because there's basically no policy space," he continued.

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Low volatility defines the year for the stock market

One of the biggest stories in the stock market globally — particularly in the USA — in 2017 has been the shocking lack of volatility. The VIX, often known as the "fear index," has spent much of the year anchored near record lows, as volatility remained virtually non-existent.

That has been particularly surprising given the fact that 2017 has been characterised by heightened geopolitical tensions between the USA and North Korea, fears about the agenda of US President Trump, as well as fears early in the year about the possibility of France electing the far-right Marine Le Pen to its presidency.

Add Brexit to that picture, and volatility should really be higher than it is, leading some in the market to speculate that the VIX is "broken."

Brexit pushes UK inflation to its highest level in five years

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Inflation has returned to the UK with vengeance in 2017, as the slump in the value of the pound since the Brexit vote filters through to the price of every day goods and services for regular Brits.

The London housing market cools down

London's property market has been insanely hot in the last few years, with prices growing wildly as investment poured into capital but the supply of affordable housing remained subdued.

The chart above, from the Royal Institute of Chartered Surveyors, shows how stark the fall in prices in London is compared to the rest of the country.

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The world's companies pass $80 trillion in value

This chart, flagged by my colleague Jim Edwards, shows that i

Stocks hit all-time highs (over and over and over)

After hitting 20,000 points in January, the Dow Jones Industrial Average has continued to surge, coming close to the 25,000 point mark during early December.

Stocks in the USA have continued to rise throughout the year, with a combination of the soaring US economy, and improving earnings from firms pushing valuations higher.

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The Dow's main counterpart indexes, the S&P 500 and the Nasdaq have followed suit, hitting fresh high after fresh high throughout the year, as the charts below illustrate:

The yield curve continues to flatten — possibly auguring stormy waters ahead

2017 has seen the curve on US bonds, largely seen as a pretty good analogue for the global markets, flatten even further.

At its most basic level, a flattening yield curve means that the gap between yields on longer dated debt and short dated debt are narrowing. Shorter term debt usually has a lower yield than longer term debt, as the risk investors are taking on is undertaken over a shorter period i.e. less can go wrong in a year than it can in ten.

The flattening yield curve is never really anything other than an indicator of slowing growth, which is not a good sign. As BlackRock's Aubrey Blaseo explained in a blogpost this week:

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"Fixed Income 101 tells us that this foreshadows slowing economic growth. More worrisome, when the two-year/10-year spread hits zero, or less (yield curve inversion), that’s generally considered a slam-dunk for impending recession."

People are getting very worried about China's ballooning debt

China's booming economy has been fuelled in large part by racking up huge amounts of debt, which some believe is starting to become unsustainable.

Ballooning levels of debt and dependency on credit to fuel growth continues to pose a major financial stability threat to the global economy, and could be the catalyst for the next crisis, according to an International Monetary Fund report from December.

Provident Financial loses three-quarters of its value in a single morning

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is looking into the group's car and van financing franchise Moneybarn. The regulator is making sure proper affordability assessments were made and customers in financial difficulty are treated fairly.

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