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Post by totheleft3 on Nov 13, 2022 22:51:28 GMT
Global 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-supplyHa ga darling did you get that from my link i posted |
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Post by Pacifico on Nov 13, 2022 22:51:51 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. Brexit was supposed to shield us from world energy prices - really?  |
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Post by Einhorn on Nov 13, 2022 22:53:53 GMT
Ha ga darling did you get that from my link i posted No, I missed that, Lefty. |
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Post by Einhorn on Nov 13, 2022 22:58:12 GMT
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. Brexit was supposed to shield us from world energy prices - really? I don't remember anyone saying Brexit would increase inflation on the side of the bus, Doc. If you're going to ban lists of facts on the basis that they are annoying, perhaps you'd consider doing the same with gifs. You're getting a little carried away, aren't you? |
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Post by Pacifico on Nov 13, 2022 23:00:26 GMT
Brexit was supposed to shield us from world energy prices - really?
If you're going to ban list of facts on the basis that they are annoying, perhaps you'd consider doing the same with gifs. You're getting a little carried away, aren't you? Did you really need telling that Brexit wouldn't change world energy prices?... |
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Post by Einhorn on Nov 13, 2022 23:03:44 GMT
I don't remember anyone saying Brexit would increase inflation on the side of the bus, Doc.
If you're going to ban list of facts on the basis that they are annoying, perhaps you'd consider doing the same with gifs. You're getting a little carried away, aren't you? Did you really need telling that Brexit wouldn't change world energy prices?... No, but it might have been nice if someone had mentioned that Brexit would increase inflation. |
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Post by Pacifico on Nov 13, 2022 23:08:01 GMT
Did you really need telling that Brexit wouldn't change world energy prices?... No, but it might have been nice if someone had mentioned that Brexit would increase inflation. Oh we are back to your claim that if we rejoined the EU inflation would immediately drop to 2% - are you really sure you want to push this idea?..  |
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Post by Einhorn on Nov 13, 2022 23:10:39 GMT
No, but it might have been nice if someone had mentioned that Brexit would increase inflation. Oh we are back to your claim that if we rejoined the EU inflation would immediately drop to 2% - are you really sure you want to push this idea?.. You didn't read the above article about how Brexit has contributed to the UK's inflation woes, did you, Doc? |
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Post by Baron von Lotsov on Nov 13, 2022 23:19:22 GMT
This thread is about the EU. If you want to talk about the UK start it in the relevant section, there's a good chap. You mentioned EU connections with Russia. If EU dependence on Russian gas is the reason for high inflation rates in the EU, why is UK inflation approximately the same the EU's? That is, if gas dependence is the cause of high prices in the EU, what is the cause in the UK? We were getting it from various sources but a lot from Norway. When 80% of the British population agreed with sanctions (Yougov) they were told we only get 3% from Russia so it will not affect us. It was lie because now the EU bids for the Norway gas, and indeed most of it was filling up German and other EU members' storage tanks from Norway during late summer, hence it spiked wholesale gas prices. Ships of LNG from various countries also dock with the highest bidder, and even on occasions just sit out in the water waiting for the price to rise. |
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Post by Baron von Lotsov on Nov 13, 2022 23:21:55 GMT
What's the reason for high inflation rates in the US, Australia, Singapore, South Africa, India and Turkey then? High dollar and hence expensive imports for those who need supplies from abroad. |
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Post by Baron von Lotsov on Nov 13, 2022 23:25:02 GMT
It doesn't really matter where you buy your gas when prices are set on the International market.
Not strictly true. It is the regional market since it is where the pipes run. Energy is super cheap in China. Leccy is 7p/unit compared to over 50p here.
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Post by Baron von Lotsov on Nov 13, 2022 23:34:39 GMT
Oh we are back to your claim that if we rejoined the EU inflation would immediately drop to 2% - are you really sure you want to push this idea?.. You didn't read the above article about how Brexit has contributed to the UK's inflation woes, did you, Doc? Brexit makes it worse, but is the smaller of the two factors. At a guess I would pitch it at somewhere like 1/3 - 2/3 to 1/4 - 3/4 sort of split. The inflation is split further where with the war it is not only energy but grain and fertiliser which push up food prices and the wider sanctions.
Anyway you aint seen nothing yet. The BRICS are going to dump the dollar and China is taking over the US chip industry with huge falls in profits to US firms. We are financially connected to the US, as in we share common investments and so they move and we do as well.
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Post by buccaneer on Nov 14, 2022 4:46:41 GMT
Interesting that some are desperate to pin the UK's inflation on Brexit; though it isn't surprising. Netherlands currently has an inflation rate of 14.3%. tradingeconomics.com/country-list/inflation-rateOnly simpletons would attribute inflation down to Brexit. The money supply pumped into the UK's system by virtue of The Bank of England and its QE programme during Covid has been the key component of inflation. This was inevitable and predicted over a year ago by certain economists who were concerned with the BoE complacency and believe the BoE should have been withdrawing their monetary stimulus much earlier than they did, by preparing markets for a gradual rise in interest rates. Of course, the UK wasn't the only Western economy to offer such lax fiscal and monetary policies. My guess, is the Dutch and similar nations followed a similar path in their response to Covid. But let's not let a silly political point scoring exercise like Brexit get in the way of more complex issues. |
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Post by Pacifico on Nov 14, 2022 11:49:11 GMT
Oh we are back to your claim that if we rejoined the EU inflation would immediately drop to 2% - are you really sure you want to push this idea?.. You didn't read the above article about how Brexit has contributed to the UK's inflation woes, did you, Doc? No - because anyone who thinks that joining the EU is going to see inflation drop to 2% overnight needs medical assistance. |
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Post by Baron von Lotsov on Nov 14, 2022 13:51:29 GMT
Interesting that some are desperate to pin the UK's inflation on Brexit; though it isn't surprising. Netherlands currently has an inflation rate of 14.3%. tradingeconomics.com/country-list/inflation-rateOnly simpletons would attribute inflation down to Brexit. Think about it rationally. Brexit has caused shortages in the farming sector of casual labour causing their pay to go from min wage to £12-15ph. If your labour costs are higher then your production prices will rise and that affects food prices. A second factor is disorganised customs systems and reams of manual paperwork to import, so import costs have gone up. You will find the prices would have risen highest to start with and they will start to ease off as we become more organised, so it's not really so much permanent inflation. Brexit has caused positive pressure on prices which will convert to negative pressure in the medium term as problems get fixed. Energy prices likewise are for as as long as the sanctions on Russia remain. Perhaps you aught to write to your MP and offer counselling for him to exit the anti-Russia/pro Kiev parliamentary cult started by L. Ron Johnson. |
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