UK’s Economic Nightmare Rolls On
The UK's inflation problem isn't getting better.
"These figures reaffirm exactly why we must continue with our efforts to drive down inflation so we can ease pressure on families and businesses," Jeremy Hunt said Wednesday.
"These figures" was a reference to disconcerting March CPI data. Inflation remained in the double-digits, frustrating economists who expected a decline below 10%. What little relief there was came courtesy of motor fuel prices and heating oil, as the UK begins to lap the wa
Somehow, in hindsight, Brexit doesn’t seem to have been a great idea .. the perils of isolation. As part of the European community, there was more competition in goods production, something which keeps costs/prices for all the community’s members under a certain amount of pressure. The laws of competitive advantage in trade between nations is a natural balancing mechanism. That’s all gone and companies are trying to recoup what they have lost through rising prices. This is painful to watch. The British stiff upper lip is doing a lot of damage now.
Any insight on differences/similarities between UK inflation and US inflation? Is UK simply at an earlier stage e.g. where US was 4 months and 100bp ago? Or are drivers of UK inflation fundamentally different from US?
I concur with Mr Lucky: Brexit is a big factor… specifically the free movement of labor from Europe which reduces labor costs (and yes more efficient markets than a series of bilateral deals).
The US has a more strict immigration policy than before-covid but it’s still got a lot of free movement (and lots of internal and international trade)… and another big difference:
the Dollar: world reserve currency that exports Inflation, especially when the Fed has these super attractive Treasury yields.
Finally, to be quite frank, the Tories (Conservatives with whichever PM in charge) are a poor shadow of Biden’s administration (which despite many faults actually gets a lot done).