Stagflation and the BoE rate setting vote

buglawton

Except that the soundest principle of bargaining is not to start by showing your hand.

Yet Philip Hammond seems to be setting out the UK's bargaining position - we'll cave and yes, we are amenable to economic blackmail.
http://www.telegraph.co.uk/news/2017/06/18/philip-hammond-undermines-pm-eve-brexit-talks-says-no-deal-would/

sevenhills

No deal would be bad for both sides. We might be the 5/9th richest nation, but we are a small player when it comes to EU negotiations.

westernpromise

We have full employment so I don't see stagflation as much of a risk.

Or higher interest rates for that matter.

markharding557

westernpromise wrote: »

We have full employment so I don't see stagflation as much of a risk.

Or higher interest rates for that matter.

We have 1.5 million people on JSA or UC equivalent and many more who are not counted in these figures so how do we have full employment? Surely unemployment should be near zero in a full employment scenario.

buglawton

Definition of stagflation: Prices are rising higher than wages.

So we've actually enjoyed 9 years of mild stagflation already. What's new is a sharp recent increase in inflation that will sharpen the effect.

Filo25

For all unemployment levels are low there still appears to be some areas of underemployment in the economy so I'm not sure we are likely to see big pressure for significantly higher wage increases, hence I'm also somewhat confused about the BoE seemingly moving towards increasing rates, especially with the economic uncertainty which lies ahead during the Brexit process.

That isn't a painless process of course, higher inflation with lower rates of wage increases does translate to falling living standards.