True it is but let’s put that into perspective shall we and finish off with a dram.
The first rate rise in 10 years would not have occurred had it not been for 52% of voters at last year’s EU referendum. The drop from 0.5% to 0.25% last year came at a time where there was a clear and present danger to certainty around the UK economy. Some argue this was a shock. It was. The pound literally plummeted. I saw it before my eyes that night after Sunderland came through. Perhaps less said about the football team the better but in terms of delivering, the city in the North East certainly grabbed the headlines early on that night.
The news headlines this week have been all about mood in that a rise was expected because growth in the economy was expected to surpass expectations (yeah…at 0.4%). We were being prepped and mood is the only tool left for the Bank of England. Keynes referred to it as animal spirits but don’t go off roaring yet.
Today is not an indication the economy is performing well just that inflation, as a direct consequence of the falling pound, inflicted by the 52% I hasten to add, is still rising. And now at 3%. The last 12 months have demonstrated an increase of 2.1 p.c. points from 0.9%. In July 2016 it was 0.6%. Since 1997, the Bank of England has possessed few tools to shape the UK economy’s future which was during a period of visible stability, meanwhile post-crisis it had no option but to use the full force of its main tool (QE being a new concept). This tool is interest rates and to lower the rates to it’s lowest level ever, that record having been broken just last year as explained above.
The Bank of England has been left with little option. No response this time round would see continued inflation whereas an increase in interest rates, albeit by the smallest of margins, would have a negative effect on the economy. We will expect mortgage repayments to increase as an example which in turn impacts on disposable income for lattes and purchases on the discount shelf in TK Maxx. Wages are already decreasing massively in comparison to other EU countries and the UK is now falling further behind in terms of growth as it now sees itself last position of advanced economies.
The economy is undoubtedly still recovering post 2008. The last thing it needed was another storm on top of a category 5 shit storm, serving only to chop the waters more aggressively with no real clear sky in sight. Uncertainty still surrounds the outcome of Brexit where falling back on WTO rules will grind the country to a halt and expand the state – a Tory ‘s worst nightmare. In addition, it should be alarming to us that David Davis is implementing contingency plans for a worst case scenario. It’s not looking promising, is it?
Brexit truly is a case of shooting yourself in the foot in the hope of leaving the trench but rather than expect 52% of your fellow countrymen to save you, while the other 48% are wondering what the hell you’re playing at, you’re actually hoping for the enemy to come across no-mans land to your aid and save you from your own trench that protects you.
Ain’t. Going. To. Happen.
What we should be asking ourselves and UK politicians is, what is the best case scenario irrespective of the will of the people? Undemocratic? Whatever. If so, lets see a bigger number agree leaving the EU is advantageous for everyone. Remember, it’s the economy stupid. As a student in business and management I have become accustomed to the use of frameworks and matrices to gauge an understanding of complex issues. The current position of remaining in the EU should not be ignored.
So, the Bank of England projections are based on a best case scenario and at present the outlook even on that is not good. Be prepared for the worst folks…all 100% of you. At least that’s my mood but I’m in not a part of the 52%. If they are so enthused by Brexit then they need non-Brexiteers like me to get me on board…get me in a happy mood please and I’m with you (subject to scrutiny on whatever is presented and attempting to sway my mood).