Only a modest growth of 0.5% was seen in the global GDP, despite the collapse of oil prices in recent years. In June 2014 crude was still priced at over $115 a barrel, it has since crashed to $30 at the start of 2016.

The modest growth is said to continue throughout 2016, which is good news. However, lowering prices and an oversupply of crude will put pressure on the main countries that export and produce oil around the world, some of which are England, Scotland, Wales and Ireland.

The dropping price of crude largely affects the UK and Ireland, which is the largest producer of oil and gas in Europe. In the past 10 years, the nation was able to cover its account deficit through incoming investment. However, since 2009, its shortage in investment has outpaced the insufficiency of its goods and services.

According to FXCM, “lowering prices and lagging oil production could induce a weakening of the pound.”

However, the UK remains a bullish importer of crude within Europe. Local analysts have expressed optimism that they may potentially gain benefit from the lowering oil prices by 2020, as it will spur greater investment in other sectors, such as manufacturing and transportations.

Due to the falling revenues, fossil fuel exporters and producers are forced to cut back expenditures and delay other projects. Most international oil companies are now forced to scale back their spending, make redundancies, delay some of their projects, as well as sell assets. They will be keeping activities that only offer the best returns on capital.

Analysts say, if the price stabilise in the second half of 2016, then we can expect companies to look at replacing reserves inorganically through acquisitions.

Oil price is forecasted to reach as low as $20 per barrel, but oil company OPEC said they will not slow down supply.

“We could see a short lived phase of all-out panic, which could trigger a freefall situation,” said commodity strategist Ole Hansen of Saxo Bank. “[It is still] difficult to rule out anything.”

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China’s disastrous start to 2016 trading on Monday, which saw shares slump and triggered an early closure of the Shanghai and Shenzhen stock markets, had a knock-on effect causing a lack of confidence amongst investors around the globe.

International trading desks commenced the year with caution as the Chinese volatility and heightening Middle East tension forced stocks down.

After its worst annual results in four years at the conclusion of 2015, London’s benchmark FTSE 100 closed down 158.89 points, or 2.39%, to 6,093.43, on the first day of 2016 trading. That was the weakest start for the FTSE in 16 years, with only 2000’s opening day loss of 3.81% being a worst commencement to annual trading in the index’s three decades of history.

That meant Britain’s leading companies had dropped over £38bn in value when London trading concluded on Monday, a considerable loss compared with a total decrease of £80bn over the past year.

Monday’s Chinese mayhem also caused havoc on Wall Street with US markets reacting to the news. Day one of 2016 trading in the US saw the S&P 500 slip 1.3pc, whilst the Dow Jones industrial average and the Nasdaq Composite index lost 2.2pc and 2.7pc respectively.

Across Europe the FTSEurofirst 300 index slumped as much as 2.9pc and in Paris the CAC 40 lost 2.5pc. Germany’s DAX fell a massive 4.3% as the Spanish IBEX lost 2.4%.

Trading had been called to an early close on the Shanghai and Shenzhen stock markets after 7% losses were triggered by figures highlighting a slowing trend in Chinese manufacturing – which has now been going on for ten months consecutively. The signals suggest that the world’s second largest economy is slowing down overall.

Last August China devalued its currency – the yuan – by 2% against the dollar, making it the biggest fall in value for over 20 years. That move was described by the Chinese as a singular adjustment aimed at stimulating the economy by making exports cheaper.

Experts believe that China wishes the yuan to be classed amongst the IMF’s reserve currencies which it uses for loans. Currently that group of the IMF’s Special Drawing Rights currencies includes sterling and the dollar, which China would like to join, as a mark of financial kudos.

However, if Chinese stock markets continue to fluctuate wildly and China’s giant manufacturing influence decreases the yuan is likely to suffer further, rather than imminently joining the elite.

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As markets recommenced activity on the first Monday of 2016 it was a dramatic day for the Chinese CSI300 as a huge drop in the share index triggered an automatic ‘circuit breaker’, halting trading with immediate effect.

The 7% share plunge in the opening session of the year automatically tripped the mechanism which suspended Chinese stock markets, as poor industrial output indicators and a decrease in the value of the yuan added to concerns about the giant Asian economy. It was the first time exchanges have been forced to suspend trade in such a manner.

Around 90 minutes before the end of the trading day in China, following a morning and early afternoon of heavy losses on the CSI300, activity was brought to an early close at approximately 5.30am GMT.

A 15-minute pause in trading had been applied in the afternoon in an attempt to slow the shedding of indexes, which had already dropped 5%, but trading in Shanghai and Shenzhen was again halted after resuming for a brief period in the afternoon.

The automatic ‘circuit-breakers’ designed to alleviate market volatility were in place for the first day and were called into immediate activity.

The CSI300 therefore ended the curtailed day down 7%, the Shanghai Composite Index dropped 6.9% and the Hong Kong Hang Seng Index fell 3%.

Market analysis from a private survey released early on 4^th January indicated a tenth consecutive month of slowing industrial activity in China, with a sharper decline in December than previously expected. This followed market reports last Friday indicating a contraction in the activity of larger state-owned businesses for the fifth successive month, adding to worries about the wider Chinese economy.

Speaking to Reuters, a strategist from Cinda Securities commented: “The slump apparently triggered intensified selling, while the triggering of the circuit breaker seems to have heightened panic, as liquidity was suddenly gone and this is something no one has experienced before. It was a stampede.”

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