ASKED about the biggest risks facing the financial markets, more than half of fund managers polled by Bank of America Merrill Lynch this month cited geopolitics and protectionism. And that seems hardly surprising, given the Brexit vote, the failed Turkish coup and the nomination of Donald Trump as the Republican presidential candidate.Those who operate in the financial markets instinctively favour the free flow of goods, people and, of course, capital. And things have gone their way since the Thatcher/Reagan policy revolution of the early 1980s and the opening up of China, India and eastern Europe to global markets.

The first great era of globalisation in the 19th century saw the share of trade in global GDP rise eightfold between 1820 and 1913. The emergence of the railway and steamship allowed bulky products to be sent speedily across borders. British freight rates fell by 70% between 1840 and 1890. No longer did international trade have to focus on high value goods like silks and spices. Capital also flowed across borders with British savers helping to finance railway construction in Latin America and elsewhere.  Mass migration...Continue reading