Well done to the Independent for this economic analysis

The big figure is the predicted rate of growth of the UK economy for next year, which was 2.2 per cent in the Budget in March. It could go down to about 1.3 per cent. The Treasury’s own prediction of the effect on the economy of the referendum vote, simply by denting confidence in economic prospects, turned out to be embarrassingly pessimistic, but the devaluation of the pound is bound to start to have effects next year, first on inflation but then on growth.

A falling exchange rate is contractionary upon the economy?

Who knew?

6 thoughts on “Well done to the Independent for this economic analysis”

  1. Surely it could be in the short run – if prices of imported goods rise dramatically, particularly essential ones that people must purchase, such as food and energy, then their extra spending on those must come at the expense of other discretionary spending, with would depress activity in those areas. Obviously eventually the rise in domestic prices would encourage substitution of home production for imports, and encourage exports, but one suspects there could be a short term dip in growth as the negative spending effects kick in immediately, while the positive production effects will take time to materialise.

  2. Dodging the question.

    Go all out for shale!

    It changes the game. It is the nearest thing to passing Go in Monopoly and collecting 2 zillion pounds. A gift from your God, if you are so inclined. It sits there, worth nothing, so it is a true boost to the economy.

    The effects on:
    added-value steel products (we sell them from the Basque Country too, eh? 🙂
    – Highly-paid skilled labour (lots of holes to be drilled, pipelines to be laid)
    – Lots of ancilliary jobs in the short to medium-term. Got to feed the workers on-site etc.
    – Domestic energy
    – Boost for ‘cheap’ gas-fired power plants (quick to build and no problem with private investment, hell even more construction jobs)
    – Income for local people from the tax income (promised I believe by May, keeping the local populations on-side)
    – Increased taxes for government
    – eventually lower prices on industrial energy and domestic use making industry more competitive (more jobs, yes Tim, I know they are a cost, but they make people happier) and boosting disposable income
    – No need for government investment.
    – Boosting confidence and….It’s a virtuous circle

    even the steel workers union has realised what it means. Glad to be on the same side for the first time in my life!

    Would make all the remainer whinging seem pathetic.

  3. Bilbaoboy–You are correct.

    But you assume that May has the brains of a gnat whereas she is useless BluLabour scum presently playing dress-up as Thatcher 2.

  4. Last night on BBC’s Newsnight (and yes, I do feel like I watched it so you don’t have to) was a major economics piece on Sterling’s devaluation following Brexit. Every second was about rising cost of raw materials to food manufactures and retailers, how it mihht forcw prices up for coners, how it could force firms to the wall.and which firms they might be.

    Not one second was given over to UK exporters and how this might well provide a boost to them. Oh no, that analysis belonged entirely to 2015, pre-election and how those stupid Tories had caused an over-valued pound which had caused the destruction of UK manufacturing.

    Vote Labour!

  5. Ironman

    Clearly you need to get out more, but then again, thank you for reporting back.

    As you can probably guess, I defintely would be voting Labour, if I had a vote in the UK. Here I am even luckier, Podemos have just indicated they want to increase the minimum wage by 45%, so I can vote for them instead!

    Yeah! That should sort the economy out!

  6. There’s a mega study from a couple of decades ago which found no correlation between inflation and growth either way. It’s a free market economy and intelligent people which correlate best with growth. Can’t recall the name of the authors though.
    That anti-free market planning act from the post-war period need repealing. No need for eugenics though as the two child rule is in place from next year anyway. Imv, of course.

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