how do you see the economy going in the next year or three?

birdseye

Standard Member
I am uneasy. The financial press hitherto have been full or pundits saying that the burts of inflation is only temporary, but what I am seeing is like no other high inflation period I have previously experienced. Wages for some jobs doubling. Prices for second hand luxury goods often way more than new prices. Supply of the toys which make life worthwhile very limited or non existant. Quotations from tradesmen at very high levels.

Lets get one thing straight - the cost of living index should be renamed "cost of existance" since it covers overwhelmingly things you have to have rather than things you want and which make life worth living. So it grossly understates the money that we are actually laying out. Currently the RPI is 4% or a bit above but my guess at real life inflation is nearer 15%.

We seem to be in a situation where the economy is awash with cash, workers hearing of large pay rises want their share and the governmentas shown with covid delays is not inclined to do anything until the horse has left the stable. Meantime they are throwing off cash like my dog throws off water after swimming. I reckon we are in a bubble economy right now. When will the bubble burst?

So where to move the money ? Where to invest to avoid a sinking UK? China has serious real estate issues. The US is much the same as the UK though it does have hi tec industries unlike the UK. The EU is not really going anywhere neither up nor down. Switzerland maybe?

Interesting article at UK economic outlook: the future isn’t what it used to be -
 
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Deleted member 27989

Guest
Booming. Both individuals and business will thrive. You can make lots of money in any market.
 

Mickey1980

Member
I can't see it going well. I expect a fair few more companies won't be able to pay higher wages and will fold, putting more people on benefits that don't go up with inflation, so less money in the ecconomy.
 

Smudges Dad

Distinguished Member
I expect it to get a lot worse for most people and better for a few who are already relatively well off. Inflation is rising due to Brexit and difficulties in importing some items. I know in our business we have already seen materials increase by 20-100% but we can’t put our prices up by anything like that. Interest rates for cash ISAs etc are from 0.25-0.35% so saving money is pointless, but interest on loans is not dropping.
We still have to see the imposition of austerity which will make Osborne’s attacks on the poor, sick and disabled look like halcyon days, which will increase use of food banks and homelessness spiralling out of control.
Petrol has just jumped to over £1.40 per litre so transport costs will go up again and delivery charges will also rise.
Meanwhile the government will keep pay rises to a minimum leading to people leaving the NHS, police and teaching, continuing the public sector crisis, and local authorities will be expected to pick up the slack despite their funding being cut even more.

Overall, I have absolutely no faith that this government will do anything to improve the economy apart from channelling money into the pockets of their cronies.
 

niceguy1966

Distinguished Member
We will underperform the rest of Europe. I can't see any way a country can isolate itself from its biggest markets without negative impact.

The rich will divert their assets overseas. The rest of us will get poorer.

Thank you Brexit.
 

owl61uk

Member
Down the toilet, if I am honest

Brexit is going to have a huge impact, Covid costs have to be paid for. Increases to NI and almost certainly tax increases as well as higher wages. Many smaller companies will not be able to afford increase in fuel cost, higher NI costs and higher minimum wage costs, I am thinking of businesses with maybe 5 or less employees.

With increases to fuel this will affect prices in shops, cost of heating your home etc. If you thought there were many people on breadline, using foodbanks etc you aint seen nothing yet.

Brexit will restrict choice of goods as importing stuff becomes more expensive. Exporting will reduce due to limited markets and the costs/hassle of paperwork

As always the rich will get richer and us poor plebs at bottom will have to suck it up and get on with it

Welcome to levelling up Britain
 

GBBooze

Well-known Member
Booming. Both individuals and business will thrive. You can make lots of money in any market.
Very optimistic outlook there.

That's the impact of 12 months of lockdown, in some form of another. Pent up demand meets 400 billion spent on covid.

Naturally that demand will ease into 2022-2023. The wholesale gas price and crude oil increase will offset that somewhat, as bills rise next year. Coupled with passed on costs from imports and shortages (both Brexit and Covid related).

Many struggling businesses given a lifeline in March 2020 have to face normality and loan repayments. All this will cause a situation in which the self employed and small businesses have to lower prices whilst raising wages. Naturally this will come to a head - some survive, some don't. Eventually lower demand will see redundancies increase and supply costs fall (2023 imo).

There is also the inevitability of more money being spent abroad, as stay cations are replaced by a boom in foreign holidays. Offset by more tourism here.

Housing market will cool off a bit yet prices will still increase significantly. Personally I don't think the s*it will hit the fan until the global bubble bursts in approximately 2026.
 

MrsArcanum

Member
Should not be forgotten that the governments coffers benefit from increased fuel costs, with more VAT & duty being paid. That government money has been wasted with billions paid to Tory Donors & mates, gets brushed off as "they were doing their best", when their best was distinctly for one group in particular.

Businesses will have increased costs all round, these will have to be passed on, or the business will fold. Notwithstanding increased wages and energy costs, costs for building maintenance have gone through the roof (sorry) due to shortages. These costs will be added to rents for commercial properties as well as rented housing.

Austerity did not work before, it will not work now.
 

Smudges Dad

Distinguished Member
Should not be forgotten that the governments coffers benefit from increased fuel costs, with more VAT & duty being paid. That government money has been wasted with billions paid to Tory Donors & mates, gets brushed off as "they were doing their best", when their best was distinctly for one group in particular.

Businesses will have increased costs all round, these will have to be passed on, or the business will fold. Notwithstanding increased wages and energy costs, costs for building maintenance have gone through the roof (sorry) due to shortages. These costs will be added to rents for commercial properties as well as rented housing.

Austerity did not work before, it will not work now.
Austerity worked as it was meant to. It made the rich much richer at the expense of the poor, sick and disabled.
 

Boo Radley75

Distinguished Member
Well according to brexiter cabinet member, Jacob Rees Mogg, it will be 50 years before we see any benefit from brexit and he said that before we had the blow of the pandemic. Things getting anything other than worse in the next three years is optimistic to say the least.
 

Nick74

Distinguished Member
One of the big questions is how long can the Bank of England hold interest rates at near record lows in the face of inflation? That's something of a ticking time bomb. To get a sense of just how unusual our situation is economically, interest rates have remained heavily suppressed for longer than during any period of our modern history.
 

richp007

Distinguished Member
One of the big questions is how long can the Bank of England hold interest rates at near record lows in the face of inflation? That's something of a ticking time bomb. To get a sense of just how unusual our situation is economically, interest rates have remained heavily suppressed for longer than during any period of our modern history.

Interest rates are going up at Christmas.
 

Nick74

Distinguished Member
Interest rates are going up at Christmas.

Relatively nominally, or so we're told. A 0.15 percent rise is about as tentative a step as the BoE can take.

That won't terrify the horses, but with inflation running between three and five percent, pressure will steadily increase for more dramatic action. The situation can't hold.
 

VladTheImpeller

Distinguished Member
We had 10 years of austerity which did nothing except kill a lot of people. The government is going to bring in 20 years of austerity using the gambler's fallacy of doubling up each time you lose.

The UK's best hope is being invaded by the Germans, Norwegians or Icelanders.
 

Nick74

Distinguished Member
We had 10 years of austerity which did nothing except kill a lot of people. The government is going to bring in 20 years of austerity using the gambler's fallacy of doubling up each time you lose.

The UK's best hope is being invaded by the Germans, Norwegians or Icelanders.

The government and those that fund it didn't lose.

Austerity was always about an ideological desire to shrink the state, while protecting capital interests from the fallout from the 2007/8 financial crisis.

In the most clinical terms possible, those that died were a drain on the exchequer. Protecting and supporting the most vulnerable would have necessitated tax increases on the same capital interests the government represents.

If we take a macro view, the rules of the game never change.

Since its inception, the Conservative Party has existed to protect and advance capital interests. That's its raison d'etre. The rest is smoke and mirrors: whatever illusion can be conjured to keep the Conservative Party in power to maintain that situation.
 

tapzilla2k

Distinguished Member
Relatively nominally, or so we're told. A 0.15 percent rise is about as tentative a step as the BoE can take.

That won't terrify the horses, but with inflation running between three and five percent, pressure will steadily increase for more dramatic action. The situation can't hold.

Expect a small rise this year and another rise by the Spring 2022. I think it was in the FT that I read some investors expect the UK's inflation rate will peak at 6% in 2022 and remain stubbornly above 3% for a while. Government Bond prices have gone up, but with the fall in sterling it's not going to give the normal boost you'd expect from an interest rate hike. If you can get this link to work (or search for "Investors crank up bets on UK interest rate rises") this FT article sets things out in stark terms Subscribe to read | Financial Times

I suspect the Economy is going to do very badly in the next few years and the Tory reaction with more austerity will just compound matters. What we need is investment in the public sector, education and infrastructure to get the Economy moving. Otherwise way too many people will fall on hard times which may well lead to Civil Unrest. The Tories luck in other words might be about to run out.

Basically if they decide to do yet more austerity, Levelling Up will simply remain an election slogan wheeled out in an attempt to distract from the Tories mismanagement of the Economy over the past 11 years. Osborne didn't fix the leaky roof and nor did his successors.
 

Nick74

Distinguished Member
Expect a small rise this year and another rise by the Spring 2022. I think it was in the FT that I read some investors expect the UK's inflation rate will peak at 6% in 2022 and remain stubbornly above 3% for a while. Government Bond prices have gone up, but with the fall in sterling it's not going to give the normal boost you'd expect from an interest rate hike. If you can get this link to work (or search for "Investors crank up bets on UK interest rate rises") this FT article sets things out in stark terms Subscribe to read | Financial Times

I suspect the Economy is going to do very badly in the next few years and the Tory reaction with more austerity will just compound matters. What we need is investment in the public sector, education and infrastructure to get the Economy moving. Otherwise way too many people will fall on hard times which may well lead to Civil Unrest. The Tories luck in other words might be about to run out.

Basically if they decide to do yet more austerity, Levelling Up will simply remain an election slogan wheeled out in an attempt to distract from the Tories mismanagement of the Economy over the past 11 years. Osborne didn't fix the leaky roof and nor did his successors.

Under those inflationary pressures the choice the BoE faces is stark. It can do one of two things:

1. continue to suppress interest rates and decrease spending power.​
2. increase interest rates to try to better keep pace with inflation.​

Do the first and people become poorer in real terms and tighten their belts, pushing us toward recession.

Do the second and see what happens to the property market that's become a foundation of our economy. Young people in particular, who've invested savings and everything available from the bank of mum and dad, will be pushed toward negative equity.
 

Nick74

Distinguished Member
It's a vice versa kind of thing. Unless the Tories get incredibly jammy, things are looking rather bleak.

While I of course have no idea what will happen, I'd imagine the BoE will keep interest rates as low as possible, for as long as humanly possible.

People will increasingly feel the squeeze. There will be a tipping point. Johnson or whoever succeeds him will hope we don't reach that tipping point on their watch.
 

ds3male

Member
Really really badly.

Covid effect alone on the economy is in the same ballpark as the 2008 financial crash.

Our beyond stupid version of Brexit alone would cause a big hit on the economy - well any type of brexit was always going to have a negative effect on short term economy.

And the impending big increase in the horrifically low wages at the bottom end of the economy alone would always have a large inflationary impact on the cost of all our daily essential items.

So all these together, plus the effect on the economy of huge cuts in govt spending that will have to come to at least reduce the eye-watering deficit, makes things look rather bleak.
 
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Deleted member 27989

Guest
Booming. Both individuals and business will thrive. You can make lots of money in any market.
It seems I’m being “greeted” by funnies. There was nothing funny about my post. I’m very serious. Let’s not get in the bad habits again of misusing those icons. If anyone disagrees that money can be made in any market then feel free to discuss.
 

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