Eurozone inflation falls to 5.5% in sharp contrast to UK
Eurozone inflation falls to 5.5% in sharp contrast to UK
Economists put reason for divergence down to Brexit and Britain’s energy price guarantee
Snapshot of Eurozone inflation falls to 5.5% in sharp contrast to UK. Economists put reason for divergence down to Brexit and Britain’s energy price guarantee.
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Brexit is the gift that keeps on giving.
The government can only pretend external factors are entirely to blame for so long. As more and more evidence like this continues to pile up, it will become politically untenable. Eventually it'll just be the maddest of the mad still in the Brexit camp and the less devoted Brexiteers will want to disassociate.
Did you even read the article?
Economists said most of the reason for the divergence between the UK and the EU was down to the UK government’s energy price guarantee (EPG), which has capped the cost of gas and electricity bills to the equivalent of £2,500 a year for a typical household until July. In the eurozone there have not been similar caps fixing the price over a lengthy time period, meaning their inflation rates better reflect the recent global decline in wholesale gas and electricity prices.
Did Austria, the Netherlands and Sweden brexit as well?
Edit. Why is it ok to compare UK to average of the Eurozone but not to the countries with high inflation? Double standards methinks
Literally the first paragraph says “economists put it down to brexit”. But I’m sure you had enough of experts.
The experts said that inflation was temporary. Look how its going now.
and Britain’s energy price guarantee
And you're ignoring the second half of the first paragraph?
Why?
Not ignoring it. Of course there are other factors. But brexit is definitely a factor. Therefore: Brexit, the gift that keeps on giving.
Economists said most of the reason for the divergence between the UK and the EU was down to the UK government’s energy price guarantee (EPG), which has capped the cost of gas and electricity bills to the equivalent of £2,500 a year for a typical household until July. In the eurozone there have not been similar caps fixing the price over a lengthy time period, meaning their inflation rates better reflect the recent global decline in wholesale gas and electricity prices.
A factor, but clearly not the primary one.
I work in agtech, brexit is a gift, it's caused disruption that's a great catalyst for investment in regenerative and vertical farming
Problems are opportunities
Wage growth is also high as a result of the labour squeeze that brexit is partially affecting
Problems are opportunities
Oh oh I know this one. Freedom is slavery and ignorance is strength right?
No, solutions = £
That seems suitably vague.
be specific, what can you do now that you couldn't have done in the EU and why has that caused more investment that wouldn't have happened anyway?
The CAP is an environmental disaster. The UK has now created its own agriculture policy that does not subsidise production. This was not possible whilst in the EU.
So I suppose what you are saying is, now that the cost of food production has increased that's made investments in these things more viable? Kind of sounds like some significant downsides for the other part of that equation. Not quite a Brexit benefit for the rest of us, just those in a specific VC funded R+D company.
I also think... those investments could have still happened in the EU tbh, could and maybe should have been government funded research anyway, considering there is at least one large vertical farm company in Germany.
Not really buying that as a benefit myself, but at least it is arguable!
No, the disruption to supply chains from covid and brexit have driven investment decisions to grow more in the UK and to use tech to replace low skill labour that wasn't possible with FOM providing serfs to grub about in the dirt. Cheap labour is a barrier to tech. Modern slavery is a big issue in farming
The CAP was designed to deliver cheap food during conflict, it's failed at the first real test.
The CAP takes the largest slice of the EU budget and the 'modern' farming it encourages have destroyed biodiversity and soil
Policy to fix this has failed miserably to the tune of our entire net contribution to the budget of 66b
https://www.arc2020.eu/cap-billions-spent-on-biodiversity-with-little-impact-auditors/
No, the disruption to supply chains from covid and brexit have driven investment decisions to grow more in the UK and to use tech to replace low skill labour that wasn’t possible with FOM providing serfs to grub about in the dirt. Cheap labour is a barrier to tech. Modern slavery is a big issue in farming
I agree, modern slavery is an issue as is paying these workers too little these are really domestic problems though which we still have thanks to the government farm worker visa scheme importing them from the RoW anyway. Germany and Finland both have FoM and they have 2 of the top vertical farm companies (one of them even has a project in Bedford apparently. So I don't really see how they can do it in the EU, and somehow we couldn't?
The CAP was designed to deliver cheap food during conflict, it’s failed at the first real test.
It was designed to ensure food security and nobody has gone hungry so that's not really true is it.
The CAP takes the largest slice of the EU budget and the ‘modern’ farming it encourages have destroyed biodiversity and soil
Natural resources including CAP,, CFP and any other rural and environmental measures so that's not really true either is it? Also, even if you do include all that, it comes second to Growth projects (38% vs 47.01%)
Policy to fix this has failed miserably to the tune of our entire net contribution to the budget of 66b
Hasn;t Brexit already cost more than our total contributions over 47 years? We were close to that according to Forbes 3 years ago.
So we've spent multiple times more than EU contributions would have been for the last few years to fix nothing, and stimulate an industry that is apparently already thriving within the EU.
Doesn't sound like a Brexit benefit to me, it's just loss after loss.
I’m happy to hear of a positive side effect of brexit. I’m not going to lie, I think it’s the first.
Why are you excluding energy and food?
Nevermind cherry picking 3 countries from the EU.
Also we're comparing statistics from two different organisations. The ONS was significantly defunded early on in the Tory government's rule under David Cameron, while other departments forming the checks and balances against Westminster were completely closed down - the clear message being that if the ONS didn't step into line with the government's narrative then their jobs would be next.
Meanwhile Eurostat exists to compare data between all EU countries, yet here we only see 3.
That's a conspiracy theory. Show me one respected statistician that casts any doubt on the ONS' output
They are the 3 European countries with high inflation, I'm guessing you don't know the reasons why? Hint, energy price caps and their implementation.
It's not a theory to say that the ONS was defunded in the early 2010's and stopped tracking various metrics.
They are 3 European countries with high inflation, sure, but they're not 3 EU countries that the UK is regularly compared with. They have been cherry picked for this graph.
And furthermore as far as I can tell Eurostat don't do a CPI measurement that excludes energy, food, alcohol & tobacco. Which begs the question: why don't they present the actual data they used to make the graph?
The simple truth is that the UK lost its direct comparison to EU countries when we left in 2019. Which, incidentally, is just before the start of this graph.
Any changes to ONS methodology is published openly. Again, source please.
Core inflation excludes volatilities, that's literally the definition
And why not compare countries with high inflation?
It's called core inflation. It doesn't include volatiles.
The intended use of core inflation is when the base assumption holds true, that assumption being demand for food and energy will not reduce as price increases.
That assumption has not held, we've seen a reduction in demand for both as budgets have been squeezed to breaking point, even with the price caps.
That doesn't change the definition of core inflation...
I never said it did, but it does change whether it's an appropriate measure to use.
Why not suggest one that is then
Why would I provide evidence for your argument? Burden of proof is on you chap as you are the one challenging the OP.
Core inflation is the measure used by every central bank mate.
It certainly is a measure, but The measure? Don't be reductive, no central bank uses only one measure to make decisions.
Core inflation is important in normal times when the typical fluctuations in energy and food prices are not driving changes in aggregate demand.
But these are not normal times, the fluctuations and impacts have and continue to be greater than usual, and so aggregate demand is changing as people have significantly less money due to spending on essentials, ie food and energy. Source, pretty much every interview and statement made by the Bank of England since this began.
This is a supply-side crisis where energy costs are double counted as lots of food consumed in the EU+UK is grow in energy intensive ways (industrial greenhouses, or transported by airfreight, or both). The BoE only have one tool, interest rates, which impact demand much more than supply in the short and medium terms, and constrict UK-based increases in supply in the long term as borrowing to fund new infrastructure is cost prohibitive.
The BoE are trying to restrict the money supply as, traditionally, higher interest rates are meant to incentivise saving, and reduce access to credit but Bailey knows that that cut cannot (without significant pain) come from cutting essentials. Essentials spending acts as a sort of bedrock to how much money you need in the money supply.
This is also why Bailey is always saying people shouldn't be asking for pay rises, because he's acutely aware that if people get pay rises then it will further fuel inflation as the higher prices become more affordable, and demand could rise further.
The last thing you want with a reduction in supply is a rise in demand - hence why we're increasing stock piles of gas for winter, etc.
The ability for monetary policy to effect supply-side problems is super limited - it's typically best for demand-side issues such as overheating - but we also have a government who refuses to consider any fiscal policy beyond giving money to their mates.
... Sweden isn't in the Eurozone.
Neither is the UK... The problem with being in the eurozone is that member states have no central bank. Spain, for example, is unable to reduce interest rates despite their CPI being under the ECB target of 2% and unemployment over 13%
Instead, the ECB will probably be hiking rates more to quell inflation in other member states.
This is a weird argument. The US, undoubtedly the world’s strongest economy, has a single central bank covering the Deep South and the coasts, which are also running at two different speeds. The job of Spain is to run a decent economy with no deficit, something they continually fail to do. Sure you can blame it on lack of central bank, but they’ve got other tools available for them as well.
So because the US has terribly performing states, that somehow justifies not being able to set your own monetary policy? That's a weird argument.
Maybe the reason Spain and all the other Southern European countries that struggle to run a decent economy is because the euro is set up to benefit the biggest manufacturers...
Oh don’t worry they were struggling to do well before the euro. You could argue that being a euro member saved some of them during the crash.
No doubt. European austerity made it worse though post GFC. The US and China used a shed load more fiscal stimulus than the EU, and have added trillions of extra GDP as a result.
Excluding the 4 things that affect poor people the most? Cool 👍
Lol, I didn't invent the definition of core inflation mate. Take it up with the economists