The Consequences of Brexit (part 3)

[Guest sibon]

Because it's never been that high before has it?

 

It is a fairly dramatic rise though. And a warning that all is not well.

[Cyclone]

Because it's never been that high before has it?

 

There were no suggestions before brexit that it was going to shoot up dramatically.

I suppose if you wish to bury your head in the sand you can pretend that the £ worth less than the Euro isn't brexit related either...

 

---------- Post added 14-06-2017 at 10:55 ----------

 

Inflation rises and falls annually doesn't it and there is more than one factor involved in its behaviour so to blame a referendum solely is daft. Globally it behaves in the same fashion, whos to blame for that?

 

Any analysis will tell you that inflation has been driven up because the £ has fallen and import costs have gone up, meaning that prices have been increased in the shops. It's not difficult to see the cause and effect.

[Carlinate]

We can't know the consequences of Brexit until Brexit has been completed, which it hasn't as yet.

 

One thing that does strike me is that people seem to be assuming that the UK will get a free choice in the type of Brexit we get. There are two sides to these talks and the EU are going to have a big say in whatever deal is finalised.

 

Not so much a big say as the final say.

 

The Brexit/EU proposed exit deal will need to be ratified by all 27 member parliaments.

 

It only takes one to veto it and the deal is off.

 

Fortunately, throughout our long glorious and benign history we have never done anything to upset any of them so it'll be a piece of cake.

[silentP]

There were no suggestions before brexit that it was going to shoot up dramatically.

I suppose if you wish to bury your head in the sand you can pretend that the £ worth less than the Euro isn't brexit related either...

 

---------- Post added 14-06-2017 at 10:55 ----------

 

 

Any analysis will tell you that inflation has been driven up because the £ has fallen and import costs have gone up, meaning that prices have been increased in the shops. It's not difficult to see the cause and effect.

 

I didn't rule out the referendum as a cause just that other factors come in to play. In or out of Europe inflation yo-yo's so there has to be other factors.

2.9% is a jump but its pretty much the norm for the UK and if it climbs to 3% which is expected it's still within our average.

[Carlinate]

This is an interesting article by an uninvolved observer.

 

http://disq.us/url?url=http%3A%2F%2Fwww.nybooks.com%2Fdaily%2F2017%2F06%2F10%2Fbritain-the-end-of-a-fantasy%2F%3ADvu6idk4Mt2zQqoIY2oyUbMFiBI&cuid=3093723

 

The writer is a columnist for the Irish Times and a literary editor.

 

The Irish Times has a reputation for being quite pro British in its views so the article is somewhat sobering.

 

He makes some valid points in my opinion.

[Cyclone]

I didn't rule out the referendum as a cause just that other factors come in to play. In or out of Europe inflation yo-yo's so there has to be other factors.

2.9% is a jump but its pretty much the norm for the UK and if it climbs to 3% which is expected it's still within our average.

 

It's a dramatic rise due to the short period over which it happened and is above the BoE target rate.

[silentP]

This is an interesting article by an uninvolved observer.

 

http://disq.us/url?url=http%3A%2F%2Fwww.nybooks.com%2Fdaily%2F2017%2F06%2F10%2Fbritain-the-end-of-a-fantasy%2F%3ADvu6idk4Mt2zQqoIY2oyUbMFiBI&cuid=3093723

 

The writer is a columnist for the Irish Times and a literary editor.

 

The Irish Times has a reputation for being quite pro British in its views so the article is somewhat sobering.

 

He makes some valid points in my opinion.

 

Yes I read that the other day, well written a nice piece. It's good to stay in touch with an opposing view, keeps it all sane.

[Cyclone]

It's an interesting article, but expect the die hard brexiteers to dismiss it all.

 

The actual result of the referendum last year was narrow and ambiguous. Fifty-two percent of voters backed Brexit but we know that many of them did so because they were reassured by Boris Johnson’s promise that, when it came to Europe, Britain could “have its cake and eat it.” It could both leave the EU and continue to enjoy all the benefits of membership. Britons could still trade freely with the EU and would be free to live, work, and study in any EU country just as before. This is, of course, a childish fantasy, and it is unlikely that Johnson himself really believed a word of it. It was just part of the game, a smart line that might win a debate at the Oxford Union.

 

They'll either claim that this was never the case, or that it still is the case, or both simultaneously perhaps.

Don't forget that in their world 52% is a huge majority, a landslide win.

 

---------- Post added 14-06-2017 at 14:44 ----------

 

Strip away the post-imperial make-believe and the Little England nostalgia, and there’s almost nothing there, no clear sense of how a middling European country with little native industry can hope to thrive by cutting itself off from its biggest trading partner and most important political alliance.

Scary stuff, if you don't live in make believe brexit land :-(

[silentP]

It's a dramatic rise due to the short period over which it happened and is above the BoE target rate.

 

The magic 2% yes I know but the BoE did predict this last year so I'm guessing they were prepared. I believe they're waiting to see what happens next before they intervene and take some form of action.

[L00b]

I'm sure its playing a role in this sequence of events yes

You remember what "sequence of events" led to the last highest in date of 5% at end 2010/early 2011?

 

5% is where the UK inflation rate is headed by Xmas 2017. That was Dame Frances Cairncross' prognosis in November 2016. It wasn't a ceiling, either. So far, the inflation rate is tracking that prognosis, and looks to be overtaking the Guardian's more conservative estimate of 3% early (I last posted about this 13 December 2016)

 

No global financial crash to blame this time around, and for all the spin which they'll probably throw at it, I doubt the Leavers and/or the government will manage to pin it on the 'big bad EU' and get it to stick, either.

The magic 2% yes I know but the BoE did predict this last year so I'm guessing they were prepared. I believe they're waiting to see what happens next before they intervene and take some form of action.

The BoE's margin of manoeuvre is certainly shrinking by the month.

 

The problem isn't so much inflation. The problem is (long-)stagnant wages, and the gap between wages and inflation, fast-growing afresh at the expense of spending power...which is a sizeable chunk of what powers the national economy in the UK: retail sneezes, and the whole economy catches a cold.

 

It's all very well tanking your national currency to boost exports and help suppress anxiety building in the business community. But the chickens inevitably come home to roost once the value differential has made its way within supply chains all the way through to cost per retail unit and worker wages.

Edited June 14, 2017 by L00b