IMF discusses inflation trends in the global economy
We have the worst inflation. Worst growth. Worst currency. Worst stock market. Now it seems we have the worst property market, too.
While the UK is undeniably in a mess right now, so is almost everywhere else. Yet we’re the ones being singled out, again and again.
Take inflation. Yes, I’ll admit it’s really bad. Even after dipping in June, consumer prices still rose 7.9 percent. That compares to an average of 5.1 percent across the Eurozone.
Is Brexit to blame, though? I’m not convinced. Sweden is still in the EU but its inflation figure for June was 9.3 percent.
Both the UK and Sweden are heavily dependent on gas imports, and have been punished by skyrocketing wholesale prices. Brexit has nothing to do with that.
The IMF started the year by claiming UK GDP would fall by 0.3 percent this year, the worst in the G7. It had to be, because we’re the worst.
All the big international organisations assume the worst of us, because of the B-word. Even when the data doesn’t support it.
In the first quarter of this year, the UK grew by a meagre 0.1 percent while eurozone GDP fell 0.1 percent and Germany’s economy shrank by 0.3 percent.
The IMF has since upgraded its forecasts to show the UK is now on course to grow 0.4 percent this year, due to our “higher-than-expected” resilience.
Apparently we’re not facing a recession at all!
Unlike EU powerhouse Germany, which is set to shrink by 0.1 percent.
During last autumn’s mini-Budget fiasco, the usual suspects were forecasting a run on the pound, but that didn’t happen either.
Instead of falling to parity with the US dollar as forecast, it has since rocketed more than 20 percent to around $1.30. We’re up 13 percent against the euro, too. And just in time for our summer holidays.
Naturally, our stock market has to be one of the worst. Bloomberg, which hates Brexit, recently delighted in calling it “cheap and hated”.
It doesn’t feel the need to crow when other country’s stock markets struggle, but other countries didn’t vote for Brexit.
On Wednesday, the FTSE 100 jumped 1.80 percent following June’s lower-than-expected inflation figure.
Now investors are waking up to the reality that UK shares offer better value than the horrendously overpriced US market. We’re in a sweet spot right now.
This week it’s the turn of our housing market to get a punishment beating, with S&P Global Ratings claiming yesterday that UK house prices will fall 12 percent from peak-to-trough by the end of 2024 and guess what?
That’s the worst in the developed world, too. Quelle surprise.
As if that wasn’t bad enough, S&P sees “little prospect” of a recovery as mortgages will be more expensive “for the foreseeable future”.
“There is still some time to go before mortgage pain reaches its peak,” it gloats.
The moment I read that, I stopped panicking about our house price crash. It probably won’t happen.
Once again, the big international experts are calling our economy wrong. It’s become a reflex action. They don’t even know they’re doing it.
Groupthink is another word for it. It’s seized all the big financial institutions, including the Bank of England, as former Governor Mervyn King pointed out yesterday.
The BoE has also been forecasting all sorts of dire events that never came to pass, and it’s all part of a pattern.
I’m now betting that the UK property market will show “higher-than-expected resilience”, too. There are just too many people hunting for homes in our overcrowded island.
And with wages are rising at 7.3% a year, plenty can still afford to buy.
Plus seven in 10 homeowners have cleared their mortgage, so rising rates won’t make a blind bit of difference to them.
None of the big political and financial bodies likes us after Brexit but frankly, I don’t care.
We can muddle along without their support. Britons may no longer believe we’re the best in the world, but we’re far from being the worst.
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