FYI: Pound hits three-year low against euro

AnotherJoe

mwpt wrote: »

. I'm making general points in a discussion forum because I disagree with the notion that whatever seems to happen, it's always good news because we voted for brexit.

It generally seems to be the opposite to me, it's always bad news because we voted for Brexit. generally along with "you reap what you sow" " you deserve what you voted for" " bet you don't feel so clever now" and usually finished with "I'm off to France where there are no problems"

And FWIW I voted remain (unhappily) but don't go for all this Henny Penny cr*p, the way the remainers moan on, no country outside the EU can possibly survive. Had we exited in 75 we'd be fine now. Yes it's a great big mess to extricate the UK but of course it will be done and the UK won't sink under the waves.

wotsthat

CLAPTON wrote: »

do you never substitute one product or service that has done up for an equally satisfactory alternative?
RPI include mortgage interest payments : many people in retirement are no affected by these

Well of course. My personal inflation rate is below the general rate but it's an effort and if it was so easy to avoid there would be no such thing as inflation.

CLAPTON

wotsthat wrote: »

Well of course. My personal inflation rate is below the general rate but it's an effort and if it was so easy to avoid there would be no such thing as inflation.

do you really have so little knowledge of economics?
or are you only making nonsense anti brexit pointing scoring?

Kohoutek

Conrad wrote: »

Going to be such a laugh seeing Britian prosper and the Remoaners crowd all grumpy they called it so badly

In Q2 2016, the UK's economy grew 2.2% year-on-year and unemployment was 4.9% (lowest since 2005). Seems okay to me.

What can we expect when the UK prospers?

wotsthat

CLAPTON wrote: »

do you really have so little knowledge of economics?
or are you only making nonsense anti brexit pointing scoring?

Inflation measures are a reasonable proxy for stuff people need/ want getting more expensive. If people could or wanted to easily avoid paying more for stuff then wouldn't you expect inflation measures to be zero?

As I say, I reckon my personal inflation rate has lagged CPI/ RPI for a decade or so but that hasn't come without effort and some investment.

I note that you haven't pointed out (for a change) that the basket of goods reaching an all time high in price is hardly something to celebrate so it's a bit rich to try and imply it's me that's the Brexit partisan.

CLAPTON

wotsthat wrote: »

Inflation measures are a reasonable proxy for stuff people need/ want getting more expensive. If people could or wanted to easily avoid paying more for stuff then wouldn't you expect inflation measures to be zero?

As I say, I reckon my personal inflation rate has lagged CPI/ RPI for a decade or so but that hasn't come without effort and some investment.

I note that you haven't pointed out (for a change) that the basket of goods reaching an all time high in price is hardly something to celebrate so it's a bit rich to try and imply it's me that's the Brexit partisan.

It is generally accepted by economists (before brexit) that CPI/RPI are useful indicators of the general movement of the price of goods.
It is equally accepted that most people avoid some of the price increases by changing their spending habits. So in general actual 'inflation' is less than 'official' inflation although not zero.

In mathematical terms the price of the 'basket' of goods and services has reached an all time high over 400 times over the last 40 years. I don't know whether this is a consequence of being in the EU or whether you view that as a good thing or a bad thing.

In real terms of course that basket of goods and services is massively cheaper now that 40 years ago.

I fully accept that a fall in the value of the pound will increase import prices and will make exporting easier. The increase in import prices will work through to the general price level.

The vast majority of economists think that modest price inflation is a 'good' thing so I am torn between your view that is a bad thing and the general consensus of economists who view it as a good thing.
Of course those text books were written prior to brexit so maybe their view has changed.

In any event, inflation in a consequence of other changes which, in my view were inevitable as we have a huge current a/c trade deficit which is increasing due to the population rise which demands more imports.
Brexit certainly was a trigger that caused the immediate fall in the value of the pound but it was inevitable.

wotsthat

CLAPTON wrote: »

It is generally accepted by economists (before brexit) that CPI/RPI are useful indicators of the general movement of the price of goods.
It is equally accepted that most people avoid some of the price increases by changing their spending habits. So in general actual 'inflation' is less than 'official' inflation although not zero.

In mathematical terms the price of the 'basket' of goods and services has reached an all time high over 400 times over the last 40 years. I don't know whether this is a consequence of being in the EU or whether you view that as a good thing or a bad thing.

In real terms of course that basket of goods and services is massively cheaper now that 40 years ago.

I fully accept that a fall in the value of the pound will increase import prices and will make exporting easier. The increase in import prices will work through to the general price level.

The vast majority of economists think that modest price inflation is a 'good' thing so I am torn between your view that is a bad thing and the general consensus of economists who view it as a good thing.
Of course those text books were written prior to brexit so maybe their view has changed.

In any event, inflation in a consequence of other changes which, in my view were inevitable as we have a huge current a/c trade deficit which is increasing due to the population rise which demands more imports.
Brexit certainly was a trigger that caused the immediate fall in the value of the pound but it was inevitable.

So we agree the price of stuff continues to go up, the fall in Sterling has probably accelerated that increase and, whilst people will take avoidance measures, a positive inflation figure is evidence they haven't managed to mitigate price increases fully.

I note your view that a collapse in sterling is down to immigrants and was inevitable. We've been here before - you've mentioned you've been going on about the trade deficit for many years but it's noteworthy that despite this Sterling hasn't seen 30 year lows for, well, 30 years so it wasn't that inevitable until, coincidentally, we voted to leave the EU - our biggest single trading partner.

I'd suggest your view that Brexit was a trigger for people to wake up and note the current account deficit is nothing more than confirmation bias especially considering a Brexit vote, in theory, should lead to fewer immigrants coming over here and consuming things.

Nick_C

CLAPTON wrote: »

RPI include mortgage interest payments : many people in retirement are no affected by these

Which is why I use RPIx as my measure of choice, and that has also risen to 1.9% !

Thrugelmir

Kohoutek wrote: »

In Q2 2016, the UK's economy grew 2.2% year-on-year and unemployment was 4.9% (lowest since 2005). Seems okay to me.

What can we expect when the UK prospers?

Where are consumers going to get the money from once PPI dries up? How will rising prices of imported product impact the economy once hedged currency positions expire? Nor forget China is exporting deflation.

CLAPTON

wotsthat wrote: »

So we agree the price of stuff continues to go up, the fall in Sterling has probably accelerated that increase and, whilst people will take avoidance measures, a positive inflation figure is evidence they haven't managed to mitigate price increases fully.

not really: the inflation measure reflects the change in prices and doesn't account for the level of substitution of dearer goods by cheaper ones, at least in the short terms : so the inflation as meausre by ONS will be higher, in general, than that experienced by ordinary people (on average of course). Its good to see you are behaving like an 'ordinary person'.

We know the nominal price of stuff continues to rise (at least for the last 70 years ) althought the real price has dropped enormously.
We also note that the vast majority of economist (pre brexit) used to think that a modest level of inflation (say 2%) was a 'good thing'. I don't know whether they have changed their minds after brexit.

I note your view that a collapse in sterling is down to immigrants and was inevitable. We've been here before - you've mentioned you've been going on about the trade deficit for many years but it's noteworthy that despite this Sterling hasn't seen 30 year lows for, well, 30 years so it wasn't that inevitable until, coincidentally, we voted to leave the EU - our biggest single trading partner.

No that's not my view : the current a/c deficit occured for a lot of interconnecting reasons; clearly the high level of the pound was supported by a wall of foreign money buying UK assets, businesses, property etc. : It used to be called 'inward investment' before brexit although it seems to be called a 'fire sale' by remainers now. I've posted many times on how undesirable this is as it means we are selling future income streams in exchange for short term consumption.

If this wall of money had been absent, then the price of the pound would have fallen years ago and this would have caused import prices to rise and would have helped our exports.
The issue with population increase (whether 'natural' or through immigration ) is that this increases the level of imports but does not have any significant effect on exports.

In my view it was inevitable that the flow of foreign capital into the UK would slow down or cease and this would inevitably cause the pound to fall in value.
The (welcome ) catalyst for the fall in the pound was the brexit vote.
I do not think that this was due to people waking up to the size of the deficit (they knew that already) but the slow down in selling off our future profit/dividend flow is welcome.

I'd suggest your view that Brexit was a trigger for people to wake up and note the current account deficit is nothing more than confirmation bias especially considering a Brexit vote, in theory, should lead to fewer immigrants coming over here and consuming things.

sorry I don't understand your point here