Wednesday, January 22, 2014

Giovernment debt steadily increasing at 12,000,000,000 per month!

Is Britain's Recovery Too Good To Be True?

There was more good news for the UK economy this morning; the unemployment rate dropped to 7.1% during the three months to December - the biggest ever quarterly increase in employment. This follows the IMF this week raising its (admittedkly terrible track record-based) forecast for the UK economy; it now expects it to grow 2.4% this year which is faster than any other major European economy. Nick Beecroft, Chairman of Saxo Capital Markets UK, is “optimistic” about Britain’s recovery, but has three concerns... 1. The recovery is too dependent on consumer spending (borrowing). 2. The pound is too strong. 3. Bank of England could lose its credibility. - If carney wants to keep rates lower but keep the threshold at 7 percent, people may start to ask what value it actually has.

Posted by khards @ 06:31 PM (2474 views)
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One thought on “Giovernment debt steadily increasing at 12,000,000,000 per month!

  • The pound is too high and I often wonder why. Look at this announcement,

    http://www.bloomberg.com/news/2012-07-25/hitachi-s-u-k-train-venture-said-to-plan-2-1-billion-pound-loan.html

    The reason why Hitachi got the contract to build 2 billion of trains was because they are essentially providing vendor financing, but, where do they raise the capital from, Hitachi have a good credit rating and I think they get a lot of the money from overseas. Which means that people holding euros or dollars, that want to get out, can -buy pounds- and lend them at a presumably decent yield to Hitachi. So in a way although the UK borrowing goes up, it goes up in a way that provides short term support for the pound. This is likely to be the case for the new nuclear plants also. This is perverse because as the UK layers on more debt the value of the pound goes up, only at the beginning though. When the payback comes, all that two billion is a sterling sale.

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