So Sterling has declined around 17% this year, mainly due to #Brexit, there is both good and bad to come out of this.
it will be ‘bad’ inflation
First let’s deal with the bad, Oil, which is priced in dollar$ and so is up, this has a knock on effect on all prices, due to the basic fact we need things moving from one place to another. So all goods in the shops will be negatively affected, in other words the price will edge upwards. Also all the goods being imported, will now cost the purchaser around 17% more, this doesn’t mean the cost in the shops will rise 17%, because the purchase price is only a percentage of a product’s overall cost. But it does mean prices of all imported goods will rise, this will hit inflation, also it will be ‘bad’ inflation, meaning it will affect “The Pound in your pocket”. This is a timely point to note that the £ Sterling being devalued is nothing new. On November 19th 1967 Harold Wilson made his famous speech, using the now infamous words, “The Pound abroad is worth 14% or so less in terms of other currencies.” ………“That doesn’t mean, of course, that the Pound here in Britain, in your pocket or purse, or in your bank, has been devalued”, yes it did Harold, you disingenuous little toe rag. https://www.youtube.com/watch?v=-IHVQU9BSks Also 16th September 1992 otherwise known to British Manufacturers as Golden Wednesday, (and needless to say to the wretched Socialist BBC as Black Wednesday) led to a resurgence in the export and manufacturing sectors of UK economy. However this is pointed out with a caveat, the Government didn’t back up this ‘Golden’ opportunity with macro economic stimulus to those parts of the UK economy.
As I have said in other blogs, there needs to be a move away from consumer spending, to savings and investment in trade and commerce. There is the appetite for it, and look around and there are the signs the British economy keeps trying to expand into sectors deemed lost for ever, they aint.
Boaty McBoatface has had its keel laid, at the Cammell Laird Shipyard in Liverpool, an acorn planted to start building larger vessels in the UK again. The Raspberry Pi Computer, manufacturing has been moved from China to Pencoed in Wales. href=”https://www.raspberrypi.org/blog/made-in-the-uk/”>Raspberry PI These are just two examples and obviously nothing to do with #Brexit. It does show the desire and abilities are there, but also with Sterling down, UK can be so much more competitive.
Germany has benefited from an undervalued Euro since shortly after its inception. From the German perspective, the Euro is dirt cheap, and hence they can export at ridiculously low prices, and still make a profit. This is due the PIIGS Countries, Portugal, Italy, Ireland, Greece and Spain pressuring the Euro down, Greece especially. If Greece could be persuaded to leave the Euro, the knock on effect for UK would be the re-valuation of the Euro, with Greece out, the Euro would rise, at which point, Portugal, Spain, Italy would look to bailing out of the Euro, because their Economies wouldn’t stand it, Ireland would probably come out but for more and different reasons. At this point the Euro would be well past parity with the Pound, perhaps 90 cents, possibly as low as 80. How much your Beemer and Merc then? No such thing will happen in the short term of course. It would require too much imagination for any UK treasury official to think they could wreck the Euro, and make dosh underwriting a Drachma. But someone needs to, with un-employment so high, especially youth un-employment, the PIIGS countries need a break.
what a shed load of tripe
#Remoaners are now saying we must stay in the customs union, what a shed load of tripe, firstly why would Germany block vehicles going over to Germany, when all it would mean is German imports to UK stop. I think somehow Mercedes Benz, Audi, VW, BMW, Dortmunder Union Brewery, Dortmunder Action Brewery, multiple other Breweries, plus all the electrical, pumping, chemical, and engineering industries currently exporting to UK may have some objection to that? I’m sure the French wine industry will happily stop selling us there products?
The problem for #Remain, is they have no real argument, their main criteria to #Remain was economic, but it doesn’t add up, Japan does very nicely, by not having a single market agreement with any trading bloc, especially a trading bloc that is sclerotic, like Europe.
Now that Sterling is trading at much closer to where it should be, the Government needs to put Economic stimulus and incentives into boosting trade and commerce overseas. We need to cast off the shackles of inwards looking Europe and its Socialist dogma, and to start looking at the direction the world is going, and it’s a technological future, with more and different types of jobs. This is guaranteed, because there has just been a flurry of talk over how jobs will be lost due to robots doing all our work.
Yeh, right just the same as all the jobs that were lost, due to mechanisation back in the 18th and 19th centuries? Things are different this time I hear the cry. No they aren’t, efficiency pays wages and creates spare wealth, which always finds ways to spend that wealth. Dog walking anyone?
Meanwhile back on the inflation front, it means the amount of imported goods will either reduce, or go up in price, at which point UK industry will start to step in and produce alternatives. But the main benefit will be the trade deficit, it will drop. Unfortunately it won’t disappear, we haven’t the spare capacity to move from deficit to surplus, so quickly, however if Mark Carney were to start moving interest rates upwards, people would start saving more, which would mean there would be more money to lend to Industry and Commerce.
However we are then back to the fact that this Government does not look as though it will change policy from consumer spending, to trading and overseas commerce.
meaning it will hit your pocket
Inflation has so far, not been affected much by the Pounds decline, but it is building up, and as I said it is bad inflation, meaning it will hit your pocket, and those with least will be hit hardest, or correction, he says thinking of himself, it will hit those who spend money on consumer goods. A thing I’m notoriously bad at, why should I go and spend lots of money, when I can get pleasure from eating a slice of buttered toast?
The jobs market is booming at the moment, but this will slow dramatically as the uncertainty over where the UK will be in five years starts to dig in, but it will be short lived. Some of us have been here before, and it is small businesses that start up under these circumstances, a few people see opportunities while the majority are wondering what the hell is going on. It would be boosted were mark Carnage to increase interest rates by more than ¼ of 1%, in the next month. Any bets he won’t, and 3% by spring is a none runner, but the upside were he to do so, would be he would then have manoeuvring space, when inflation has run its course and deflation set back in.
He has been warned.