Quote Originally Posted by Stolly View Post
A week pound improves exports but makes imports more expensive. Amongst other things, imports such as oil. Ignoring tariffs (which may come later) price increases directly cause inflation. Toblerone have already taken drastic action , VW have announced price increases, and Unilever are strongly hinting at them so this isn't something that might happen, its already happening. Inflation, unless earnings rise hand in hand with it, decreases demand for goods. Inflation also usually leads to interest rate rises and, at present, aren't we at largest ever personal borrowing levels at £1.5 trillion? The IFS have predicted a £25 billion additional borrowing requirement for the government in this parliament directly down to Brexit - that's £25 billion taking into account EU contribution savings! If that proves to be the case how is Brexit economically a good thing?



I'm not talking about concerns over immigration. Lots of people, brexiters and remainers, Germans, French, Dutch et al have concerns over that. I'm talking about out and out racism.
The Bank of England has a target inflation rate of 2% and it has been below target since 2013. In fact it is so far below target that for the second time the Governor will have to write to the Chancellor to explain why.
A moderate rate of inflation is an indicator of a healthy economy and hence the target rate so the economy can manage some inflationary pressure.

Until the BoE announced the rate cut in August, QE and other measures, the £ was above $1.30 which was in reality only a drop of around 7% from the pre-referendum trend rate in the 1.40s.
Those measures by the BoE were in view of 0.1% growth in 3rd quarter and similar in the 4th quarter and less than 1% on 2017.
These BoE measures hit savers, hit the £ and were based on forecasts that were way below the reality. They have probably doubled the drop in the £ since the referendum.

The fact that VW are putting up there prices is exactly what I have forecast if you have read my pre-brexit report that I posted on #259.
It won't just be VW it will be others.
But Nissan, Toyota, Honda....will not have to do so the % of UK made cars sold in the UK market should increase.

So modest inflation, increased exports due to lower £ puts more money in people's pockets, increased business in UK market due to less competition from overseas.

The extra borrowing requirement is because the Chancellor has decided to relax the deficit targets that Osborne set. Blame Brexit perhaps, but Osborne's figures were largely political anyway targeted at hitting some headlines just before the 2020 election they had planned.
At least that is what Osborne's critics were saying when he set those targets.

How is Brexit a good thing? Well personally life isn't all about GDP / Growth and money. Whilst I enjoy a debate, I actually think we could see a drop in GDP and see our quality of life improve in the UK. We will only be able to make a judgement in 10 - 20 years time.

It will be a judgement as we will never know for sure. But we can probably get a gauge from the relative economic measures for similar economies like Germany and France.