- Aug 17, 2005
I am aware of the differences between the eu and the uk however I deliberately chose Germany as they are the main paymasters of the eu with an inflation rate already of 4.2 and expected to go up to 4.5 by the end of the year. Now u are very fond of pointing things out that your opinion is bad for the uk. Like inflation a few weeks back. However u don't accept its bad for the EU. They have been issuing bonds for years now and have 3 trillion of them in circulation, as you pointed out for uk as interest rates go up so does the repayments on those bonds. In order to keep inflation under control they can either cut interest rates currently impossible or cut off the money supply the quantative easing. Germany being the main paymasters are naturally against the issuing of the bonds and will be pushing for the ending of it. Its going to be a very fine balancing act and it could easily end with the demise of the euroThe EU rate of inflation is 3.2% slightly higher than 3.0% in the UK. However the Bank of England has warned that this will rise significantly this year , exacerbated by the UK's self imposed trade barriers with the EU from where we import just under half our stuff. Then in January if the Government does actually get Brexit done can you imagine what will happen to inflation when every single item coming into the country will be subject to quantifying, quality checked forms and other red tape, duties, VAT and tariffs where country of origin checks aren't passed.
In the last few weeks the pound has depreciated from 1.18 to 1.16 euros and again its only going one way when Brexit is fully implemented. The pound was 1.42 just before the Brexit vote was announced ie we're paying 20% more for everything coming into the UK from Europe plus foreign travel holidays etc