AUGUST is always a funny time in the global economy. Even bankers and hedge fund managers feel the need for a holiday. So the international capitalist machine has a tendency to go into slow motion over the summer months, as the folk who make all the big investment decisions head for their favourite Caribbean beach, or snooze under the awning of their luxury yacht. Which makes it very difficult to distinguish long term trends in the economy from summer glitches.

This August a lot of strange things have been happening to the global and UK economies. For starters, money has been fleeing China in record amounts. In the first three weeks of August, close to $100bn illicitly poured into Western banks - despite draconian threats from Beijing. This panic was triggered by news of a sudden worsening in Chinese manufacturing output, which undermined premature claims by the Chinese leadership that this year’s economic downturn had ended.

Question 1: Is the Chinese economic miracle, which has kept the world growing since the credit crunch of 2008, now over? Or is this merely a summer blip?

Meanwhile, oil and commodity prices have turned downwards again after a modest recovery earlier this year. Petroleum has plunged 30 per cent from its 2015 high in June. West Texas crude slumped below $40 a barrel Friday for the first time since 2009. Our own North Sea Brent fell eight per cent last week, to $45. This is mainly a reaction to the nuclear deal with Iran, which will lift trade sanctions and let Tehran’s oil back on to already glutted world markets. Yet everyone knows that it will take years before that happens, so the plunge in petroleum prices could just be summer madness.

Question 2: has the world entered a new energy era, in which cheap oil from fracking and solar power will force oil prices below $50 a barrel on a permanent basis? Or will a combination of the Saudis’ need for higher prices and the big energy firms’ need to develop expensive new fields, ultimately push oil back up to its “replacement” price of circa $100 a barrel?

Freight rates for container shipping from Asia to Europe fell by a fifth in the second week of August, when they should be picking up a bit. If container ships are not being hired, it’s a sure sign there is less importing and exporting going on. This could be very bad news for Chancellor Osborne, who is predicting strong UK growth to make his books balance.

Question 3: Is the summer malaise in global trade linked to temporary jitters about China?

In the summer, with traders away, stock exchange fluctuations get magnified because trading volumes are lower. In other words, it doesn’t take a lot to set prices gyrating. That’s just what’s been happening. Last week, world stock markets had their worst bout of panic in years, following bad news from China. US share prices saw their biggest weekly decline since 2011.

Question 4: Is the long bull market over, meaning that share prices – artificially propped up in recent years by central banks printing money – are going to fall, thus curbing investment and growth? Or can global stock exchanges defy gravity for another few years?

Meanwhile in the UK, we’ve had some strange economic weather to compliment the summer rain. The Chancellor can be happy with unexpectedly strong tax receipts, which gave the UK Treasury its first July surplus in years. That is proof that wages are rising at last – though only in the private sector. On the other hand, growth in UK employment has stalled for two months in a row. That suggests Osborne’s glib promise to create another 2 million jobs before the 2020 election is fantasy.

Question 5: Has the Chancellor’s latest “long term plan” bit the dust, like his previous ones? Has the pool of ultra-cheap labour finally dried up? Will this force UK industry to invest in machines just as its global market place disappears?

My answers to the above questions are as follows. China remains the linchpin of the global economy but not for long. It buys raw materials from the developing economies while supplying inflation-busting manufactures to the West, which conveniently keeps wages low over here. Also, China lends the West the profits from its trade, thereby funding our deficits. But the Chinese economic miracle looks increasingly threadbare. The real summer news is that there is widespread dissention inside the normally placid Chinese leadership regarding how to rescue the economy from falling profits, collapsing share prices, and a dangerously unstable banking system.

True, China may find a temporary respite from its woes – through successfully stimulating its domestic economy. Alternatively, a combination of rising interest rates in America, plus unrelieved fears for China’s future, might trigger an even bigger flight of capital into private Western bank deposits and property. Cue a global meltdown in share values, a further downward drift in petroleum and commodity prices (except for gold), and reduced economic growth everywhere.

I suspect we may see another year or two of growth. Much depends on the timing of interest rate rises. Contrary to rumour, capitalists do not have a death wish, even if the system is irrational. US, UK, European and Chinese money supply is actually growing strongly, meaning central banks are desperately trying to pump up lending. That should keep things ticking over temporarily.

Labour markets are tightening, raising the spectre of wage battles ahead in China and the West. Private debt is returning to pre-2008 levels, slowing consumer demand. China can no longer provide a source of investment opportunities, to absorb capital. Neither can a weakened global banking system. A mass of new smart technology is about to cull middle-class professional jobs over the next two decades The down-cycle in oil will add to global deflation, increasing the overall real debts.

A bad time to be talking about more Scottish self-determination? Far from it. Evidence from previous downswings shows that small, enterprising nations – with control over their own economic levers – are best placed to manoeuvre through uncertain times.

They are nimbler and more likely to agree concerted action, with less of the social friction seen in larger states which have wider gaps between rich and poor. Yes, oil prices may be lower for a period but that would be offset by higher Scottish productivity. Enjoy what’s left of your summer.