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Post by Einhorn on Nov 13, 2022 17:55:35 GMT
Despite all the criticism of the EU's shortsightedness in failing to foresee the perils of relying on Russian gas, the UK hasn't fared any better. It kind of takes the sting out of the Brexiters' criticism of the EU. So is our inflation down to Brexit or not - or is our inflation down to exactly the same reasons that countries around the globe are suffering from inflation? Why is the UK's inflation rate approximately the same as the EU's? We know that the EU's inflation is at a high rate because of its dependence on Russian gas. The UK is not dependent on Russian gas to anything like the same extent. Therefore, we would expect lower inflation in the UK. So, why is UK inflation at approximately the same rate as the EU's? |
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Post by Pacifico on Nov 13, 2022 18:18:06 GMT
So is our inflation down to Brexit or not - or is our inflation down to exactly the same reasons that countries around the globe are suffering from inflation? Why is the UK's inflation rate approximately the same as the EU's? Brexit..  |
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Post by Einhorn on Nov 13, 2022 18:33:05 GMT
Why is the UK's inflation rate approximately the same as the EU's? Brexit.. Okay. You don't have an explanation, then. I'm sure that the world energy crisis caused by the Ukraine war is a factor in the UK's high inflation rate. But you would expect the crisis to be deeper in EU, given its dependence on gas from the chief protagonist in the Ukraine war. Yet, it isn't. The UK's is the same as the EU's. This is peculiar, given that the UK doesn't have the excuse that it is dependent on Russian gas. |
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Post by Montegriffo on Nov 13, 2022 18:40:06 GMT
It doesn't really matter where you buy your gas when prices are set on the International market.
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Post by Einhorn on Nov 13, 2022 18:49:15 GMT
UK inflation: Is Brexit causing it to accelerate?
Former Bank of England policymaker Adam Posen insists 80% of high price growth is due to Britain leaving EUUK inflation jumped to over 10 per cent in July, its highest level since February 1982, intensifying the squeeze on households. Combined with widespread industrial action and a looming recession, the UK economy is beginning to look a lot like it did in the 1970s. But how much of the UK’s worse-than-average inflation rate and worse-than-average cost-of-living squeeze is down to Brexit? It’s one of the most frequently asked questions. Former Bank of England policymaker Adam Posen insists that 80 per cent of the reason why the UK has the highest inflation of any G7 country is due to the impact of Brexit on immigration and the labour market. “You’ve seen a huge drop in migrant labour, a disruption in labour markets that everybody experienced due to Covid and reopening, but with fundamentally less elasticity… and that [Brexit] has to be a major part of it,” he told a conference at Kings College in London earlier this year. Others blame sterling’s weakness in the wake of the Brexit referendum in 2016, which inflated input costs and ultimately end-user prices. To calm financial markets, the Bank of England cut rates and applied a bigger quantitative easing (QE) programme, which may also have stoked stronger price growth. The relatively larger stimulus package applied by the UK government during the pandemic has also been cited. Brexiteers strongly disagree that tighter immigration rules have anything to do with the current price surge – some say they aren’t tighter. However, it’s hard to get away from the fact that labour supply and prices have been affected by Brexit. Workers aren’t coming in the same numbers and businesses are finding it costlier to import goods from Europe. The UK in a Changing Europe think tank said trade barriers introduced after Brexit had led to a 6 per cent increase in UK food prices between December 2019 and September 2021, adding to the rising financial pressure for households. www.irishtimes.com/business/2022/08/18/cantillon-uk-inflation-is-brexit-causing-it-to-accelerate/#:~:text=It's%20one%20of%20the%20most,immigration%20and%20the%20labour%20market.
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Post by Pacifico on Nov 13, 2022 18:55:21 GMT
"80% of high price growth is due to Britain leaving EU"Great - we rejoin the EU and inflation immediately drops to 2%. What could possibly be wrong with that scenario... 
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Post by Einhorn on Nov 13, 2022 18:57:12 GMT
It doesn't really matter where you buy your gas when prices are set on the International market. I'm not an expert on the subject, but the following link claims that exposure relative to reliance on Russian gas (it cites several countries in Eastern Europe as being particularly vulnerable). If the UK is the least vulnerable, why is inflation the same? |
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Post by totheleft3 on Nov 13, 2022 18:58:30 GMT
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Post by Einhorn on Nov 13, 2022 19:00:23 GMT
"80% of high price growth is due to Britain leaving EU"Great - we rejoin the EU and inflation immediately drops to 2%. What could possibly be wrong with that scenario... Well, where are these so-called Brexit advantages, Doc? Despite being less vulnerable to the effects of the war, the UK has the same inflation rates as the EU. |
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Post by Montegriffo on Nov 13, 2022 19:15:48 GMT
It doesn't really matter where you buy your gas when prices are set on the International market. I'm not an expert on the subject, but the following link claims that exposure relative to reliance on Russian gas (it cites several countries in Eastern Europe as being particularly vulnerable). If the UK is the least vulnerable, why is inflation the same? You forgot to post the link. I'm no economics expert but logic dictates that in a global economy the same inflationary pressures will effect everyone. The differences will be down to things like tax and interest rates. Inflation is just one measure of economic health though. I think the effects of Brexit will fully manifest themselves in our rate of recovery as the cost of the extra red tape, barriers to trade and labour shortages put us at a disadvantage. |
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Post by Einhorn on Nov 13, 2022 19:45:30 GMT
I'm not an expert on the subject, but the following link claims that exposure relative to reliance on Russian gas (it cites several countries in Eastern Europe as being particularly vulnerable). If the UK is the least vulnerable, why is inflation the same? You forgot to post the link. I'm no economics expert but logic dictates that in a global economy the same inflationary pressures will effect everyone. The differences will be down to things like tax and interest rates. Inflation is just one measure of economic health though. I think the effects of Brexit will fully manifest themselves in our rate of recovery as the cost of the extra red tape, barriers to trade and labour shortages put us at a disadvantage. Apologies for omitting the link, Monte. I can't find it at the moment. The article gave several reasons why EU countries dependent on Russian gas have been particularly exposed. One was that the supply of gas has been interfered with. This has meant that some countries (Hungary, for example) haven't been able to operate their industry at normal levels, causing shortages and inflationary pressures. |
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Post by bancroft on Nov 13, 2022 20:35:48 GMT
'Not only is the UK the only major economy to be shrinking in the three months to September, but it is the only one not to have recovered in full the chunk of the economy lost during the pandemic. That is not the case for the US (+4.2%), Canada, Italy or France, by some margin, and for Japan and Germany too. If forecasts are right about a prolonged recession, it could be half a decade without growth encompassing the whole of this Parliament, and the whole of the period since actual Brexit. So yes there are many pressures that are global, from Covid to the European energy squeeze. But there are real questions now as to why the UK has been hit more than most.' www.bbc.co.uk/news/business-63596773Global energy prices and we don't keep much storage, |
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Post by Bentley on Nov 13, 2022 20:48:16 GMT
It doesn't really matter where you buy your gas when prices are set on the International market. Exactly. |
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Post by Einhorn on Nov 13, 2022 22:23:11 GMT
'Not only is the UK the only major economy to be shrinking in the three months to September, but it is the only one not to have recovered in full the chunk of the economy lost during the pandemic. That is not the case for the US (+4.2%), Canada, Italy or France, by some margin, and for Japan and Germany too. If forecasts are right about a prolonged recession, it could be half a decade without growth encompassing the whole of this Parliament, and the whole of the period since actual Brexit. So yes there are many pressures that are global, from Covid to the European energy squeeze. But there are real questions now as to why the UK has been hit more than most.' www.bbc.co.uk/news/business-63596773Global energy prices and we don't keep much storage, Yet, all the articles I've seen say that those countries which depend on Russian oil and gas have been hit particularly hard. It's understandable that they would have high inflation. Not so much with the UK. www.eib.org/en/stories/ukraine-trade-inflation#:~:text=The%20Russian%20invasion%20caused%20a,levels%20not%20seen%20in%20decades. There are other accounts of why inflation is so high in the UK: Brexit is driving inflation higher in the UK than its European peers after identical supply shocks
Adam S. Posen (PIIE) and Lucas Rengifo-Keller (PIIE) Many high-income economies are suffering 40-year highs in inflation. They all have faced the same series of major supply shocks to their economies simultaneously: reopening of the economy after the first wave of the COVID-19 pandemic in spring 2021, global supply chain disruptions for critical goods throughout the last 18 months, and energy and food price shocks caused by Russia's invasion of Ukraine in February 2022. Yet, there are significant differences in the inflation experienced, as seen in the chart. Inflation is particularly acute in the United Kingdom, triggering a cost of living crisis for British households. Comparing like for like in core inflation rates, which strips out the first-round impact of volatile food and energy components, inflation is 1.6 percentage points higher in the UK than in Germany, nearly 3 percentage points higher than in France, and more than 3 percentage points higher than in Italy. Instead, UK core inflation is catching up with core inflation in the US, despite the US having had much greater fiscal stimulus and labor market disruption than the UK (or EU) during 2021. Some observers blame elevated UK inflation on war-related food and energy shocks. Such assertions fall flat for several reasons. First, UK core inflation began diverging from Europe by mid-2021, months before the invasion. Second, all European countries are experiencing a jump in food and energy prices; some, like Germany and Italy, are even more exposed to food and energy price shocks than the UK because they are highly reliant on Russian natural gas. In any event, the comparison of core inflation (which excludes food and energy) takes that out. Third, the UK had similar labor market policies to those in France and Germany in response to COVID-19, so the aggregate wage response to reopening should have been roughly the same—but wage inflation has been much higher in the UK. We believe that Brexit is the primary driver of the high and widening inflation differential between the UK and its European peers shown in the chart: Brexit has amplified the inflationary impact of a simultaneous common shock. By ending the free movement of EU migrant workers to the UK, the UK government has unilaterally cut the labor supply and its elasticity. By adding new tariff and nontariff trade barriers, the British government has slashed purchasing power and available imports, and it has created inflation during the staggered implementation of the Brexit deal. The UK officially exited the EU in December 2020. By creating uncertainty about UK economic policy and investment prospects, Brexit has weakened the anchor for inflation expectations. Any alternative explanation to Brexit would have to offer another Britain-specific reason for the size and timing of the marked divergence in core inflation rates shown in the chart, that is, the differential transmission of the same supply shocks felt simultaneously on the continent. This PIIE Chart was adapted from Adam S. Posen's presentation at The Economics of Brexit: What have we learned conference 2022, hosted by UK in a Changing Europe. Watch the full presentation here. www.piie.com/research/piie-charts/brexit-driving-inflation-higher-uk-its-european-peers-after-identical-supply |
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Post by Baron von Lotsov on Nov 13, 2022 22:41:47 GMT
Just take a look at a handful of decisions over the last few months. Last week, the giant French auto conglomerate Renault re-organised itself into new units. One of them, making engines, will be a joint venture with ambitious Chinese business Geely (which already owns Sweden’s Volvo and its electric vehicle unit Polestar, as well as 51pc of the UK’s Lotus).
Aston Martin sold about a 7% stake to Geely as well during covid. Poor guys. |
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