So it’s becoming clear. Currency traders - as a proxy for the world at large - consider Brexit to be a damning influence on the UK’s economy.
What next? This is the risk: Marmite. We’ve seen it, hohoho, as supermarkets argue with their suppliers about who will carry the can for the foreign exchange driven increase in prices. Should the supplier reduce their prices in Pounds Sterling, or should the supermarket increase prices to the consumer?
We all know who gets stiffed in the end here. The consumer.
So then inflation is going to go up - fast. But here’s a subtle distinction of the modern world: Even if a product is made in the UK and sold in the UK - if it is owned by a company that reports their earnings in a foreign currency, well hey - they are obliged to push the prices up to keep pace. So no let-up there.
What happens when inflation rises? All together now - interest rates go up! Even though every economist can recognise the disassociation that means increased interests rates have no impact on the price of foreign goods in the short to medium term (and frankly, probably, in the long term too) - even though, they will be increased as the politicians freak out and look for familiar blankets to comfort themselves with and save the party.
Interest rates up … housing price crash as people dump their properties, accumulated over the last many years of ultra-low mortgage costs.
That crashes whatever wealth people have built up, and is a disaster.
True. Feels like it. 16% down for the dollar at the moment. Pretty bloody significant, no? Wouldn’t you say?
Point stands. Sterling is nose-diving.
How it matters? Simple things - replacing my 7 year old laptop - not going to happen. It’s an issue as the poor thing stopped accepting OSX upgrades some time back, and my work needs me up to date.
Sure; a 15.3% drop in the UKP relative to the Euro in this span of time is huge; it just isn’t 20%.
OTOH, the Euro was originally pegged to the ECU, which was around $1.15 when its conversion happened, the Euro soon dropped to around $0.80 (though of course later rose again). Makes the pound’s drop look minor by comparison.
I’ve been following this on the BBC. The obsession with marmite as the standard is amusing. Less amusing is your ministers saying they don’t care about inflation, and simply weird is the fact that your biggest national news yesterday was not this but rather a dog-biting incident. How is that national news?
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