Wednesday, July 16, 2014

A bit too forward with their guidance, methinks

UK unemployment falls to 2.12m

Once unemployment is down to 1.5m, or even 1.75m, if inflation is still above 1.5%, I don't see how they can get out of having a rate rise. That seems like it will almost certainly be before the end of the year. I suspect Carney's announcement today is related to this.

Posted by reticent @ 09:42 AM (2404 views)
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4 thoughts on “A bit too forward with their guidance, methinks

  • I can’t see how unemployment levels effect inflation post 2000 since many of our goods and food is imported. If everyone decides to eat steak because they have a good full time job then it will push up the cost of steam across Europe, not just the UK.
    If everyone decides to buy an iPad (int he goods basket) then we will just import a few million more from China. If everyone wants a new car we will order the machines to produce more and order the banks to issue more credit.

    If population level/unemployment level changed inflation then we would have seen the price of goods and services falling in 2009/2010. Inflation is more closely tided to the value of Sterling and oil prices.

    If people took home more money (wage inflation) then they would just start paying down some of their debt as debt is at record levels.

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  • So what? Spare capacity is their latest excuse and they’re running out of them.

    If they find themselves saying that 1.5m unemployed still constitutes enough spare capacity that there’s still no upward pressure on wages/inflation, they’re basically admitting that the recovery will never gain traction, because our problems are structural and anyone who isn’t asset-rich should give up on aspiration altogether, because they have nothing but declining standards of living on the horizon.

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  • mountain goat says:

    You still need someone local to drive the bus, install and repair your boiler, educate your children, stack the shelves of your local store etc etc. It is true that many goods are produced elsewhere, just as hopefully we are producing goods and services sold elsewhere. For the UK to compete we need skilled labour to compete with lower-paid unskilled labour abroad. This is where anti-immigration supporters need a bit of reflection. Many skilled people leave the UK (because they are welcomed elsewhere) but they want to restrict immigration. Currently skilled people from Europe can move freely to the UK so that should act as a buffer to wage demands as long as Europe remains in recession. However, we are talking about crisis level interest rates at the moment. If local people are confident of employment and interest rates stay this low, borrowing and inflation will easily spiral out of control.

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  • Mountain Goat! The highest rate of unemployment by country of birth in the UK, is Pakistani, Bangladeshi & Somali, do you see a pattern there? We’re still adding to that statistic.

    There are also plenty of unemployed Eastern Europeans in the country. We’re being bled dry. The ones who do work pay a patlry amount of tax, yet are entitled to everything, and all the benefits entitled to the UK elderly.

    High house prices, lower wages, overcrowding, long hospital waiting times, school rammed with foreign kids and interpreters… A future of immigrants filling up care homes and NHS waiting lines. Anybody who things this is good needs their head checking!

    These leftie nutters who filled our lives with pro immigrant propaganda are only looking as far ahead as next week, not 20 years down the line.

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