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Uk Plc Faces Bear Market As Downturn Deepens

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Terry Leahy, chief executive of Tesco, says: "It's worth discussing the relationship between inflation and demand.

"The conventional thinking is that it is demand that effects inflation, that too much demand causes inflation. Almost all policy mechanisms are set up to manage that problem in that way.

"This time it's a different relationship. It's inflation that is external that's effecting demand. It's manifesting itself as a direct tax on expenditure in terms of heating bills, petrol and food. The problem is an over compensation by the Monetary Policy Committee (MPC)."

In other words, we have inflation, such as the oil price and commodity prices, largely coming from outside the UK that we can't control, but in setting interest rates the Bank of England's MPC has to target price stability rather than growth. The result, according to businessmen such as Leahy, is interest rates that are too high.


Because they put too much fuel on the fire and now they dont have any fuel left to keep it going. Its a few factors that have push the economy into the state that it is, i blame the way stats are calculated cpi, the major source of economic problems, lots of countries around the world altered the way they measured inflation.

Put it this way, export and import inflation china is paying around 96% more on its raw material, chinese companies can't afford this, its about to explode, you have been warn.

Edited by crash2006

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The conventional thinking is that it is demand that effects inflation, that too much demand causes inflation

not true in this case.

every time you print new money into the supply you deflate the earnings or savings of a person which needs to inflate to keep level.

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Tesco are beginning to hurt.

No surpsie, been writing about Aldi, Lidl, Netto for a while.

Bottom line inflation has been largely caused by loose monetary policy, first the feelgood factor for some (HPI) now everybody gets ******ed by it. That means only the cheapest and most efficient suppliers thrive and hat does not even include Tesco. Worse the cumulative effect of years of hidden inflation have wrecked productivity and efficiency, destroyed 100,000's of productive jobs at the expensive of funding (temporarily) unproductive ones and unproductive sectors.

No going back from this, the damage has been done and the inflation that is crippling discretionary spending (even amongst savers sick to the back teeth of dwindling real returns on their money) mean that hardly anybody in the general population will want to spend now.

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  • 395 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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