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10-08-2022, 11:52 AM
PUBLISHED TUE, AUG 9 20226:35 AM EDTUPDATED TUE, AUG 9 202210:50 AM EDT
Elliot Smith
......
In a research note Monday, Saxo Bank’s head of macro analysis, Christopher Dembik, said the U.K. is “more and more looking like an emerging market country.”
......
The only factor missing from a characterization as an emerging market country, Dembik said, is a currency crisis, with the British pound holding firm despite the litany of macroeconomic headwinds.
“It only dropped 0.70% against the euro and 1.50% against the U.S. dollar over the past week. Our bet: after surviving Brexit uncertainty, we don’t see what could push the sterling pound into a free fall.”
However, he suggested that all leading indicators point to more pain ahead for the British economy. For instance, new car registrations — often perceived as a leading indicator of the health of the British economy — fell from 1.835 million in July 2021 to 1.528 million last month.
“This is the lowest level since the end of the 1970s. The recession will be long and deep. There won’t be an easy escape. This is most worrying, in our view. The Bank of England assesses the slump will last with GDP still 1.75% below today’s levels in mid-2025,” Dembik said.
“What Brexit has not done by itself, Brexit coupled with Covid and high inflation have succeeded in doing. The U.K. economy is crushed.”
......
there are longer-term implications to the current crisis.
“Imagine the graduate entering the workforce in 2009/10, who will have been told this was a once-in-a-lifetime crash. They are now in their early 30s and having yet another once-in-a-lifetime economic crisis,” Dembik said.
“They faced an economy of suppressed wages, no housing prospects, two years of socializing lost to lockdown, obscene energy bills and rent and now a lengthy recession. This will lead to more poverty and despair.”
https://www.cnbc.com/2022/08/09/britain-...-says.html
Elliot Smith
......
In a research note Monday, Saxo Bank’s head of macro analysis, Christopher Dembik, said the U.K. is “more and more looking like an emerging market country.”
......
The only factor missing from a characterization as an emerging market country, Dembik said, is a currency crisis, with the British pound holding firm despite the litany of macroeconomic headwinds.
“It only dropped 0.70% against the euro and 1.50% against the U.S. dollar over the past week. Our bet: after surviving Brexit uncertainty, we don’t see what could push the sterling pound into a free fall.”
However, he suggested that all leading indicators point to more pain ahead for the British economy. For instance, new car registrations — often perceived as a leading indicator of the health of the British economy — fell from 1.835 million in July 2021 to 1.528 million last month.
“This is the lowest level since the end of the 1970s. The recession will be long and deep. There won’t be an easy escape. This is most worrying, in our view. The Bank of England assesses the slump will last with GDP still 1.75% below today’s levels in mid-2025,” Dembik said.
“What Brexit has not done by itself, Brexit coupled with Covid and high inflation have succeeded in doing. The U.K. economy is crushed.”
......
there are longer-term implications to the current crisis.
“Imagine the graduate entering the workforce in 2009/10, who will have been told this was a once-in-a-lifetime crash. They are now in their early 30s and having yet another once-in-a-lifetime economic crisis,” Dembik said.
“They faced an economy of suppressed wages, no housing prospects, two years of socializing lost to lockdown, obscene energy bills and rent and now a lengthy recession. This will lead to more poverty and despair.”
https://www.cnbc.com/2022/08/09/britain-...-says.html
