UK Economy: What are we seeing?

What are we seeing? Well one thing’s for sure – it’s like nothing we have seen before!

There are loads of people commenting on the political situation. Suffice to say that ‘sublime to ridiculous’ comes to mind.

Economically… Well, its a shame in many ways…

As I have said, if this had been done with less arrogance and with a bit of thought instead of a rush without any support… it might have been the right answer. As Eric Morecambe once famously said, “All the right notes, but not necessarily in the right order!” 

So what has happened and why? Just as importantly, what happens now?

What has happened is that the Fiscal policy is now in line with monetary policy… so we are all singing from the same hymn sheet. Unfortunately this is a bit back to basics and a blunt instrument… but arguably the errors in the presentation and the arrogance off the Government made this the only real answer…

The UK needs credibility and only a complete change will achieve that!

So, the Conservative Government need the financial markets to “buy” this plan, and believe it… The numbers add up, so that’s good… but the economic outlook just got worse… so that’s bad. The £100 billion question is… do the markets try to kill the government force a general election and crater the currency?

Having been around the block a few times and traded during the ERM fiasco of Norman Lamont (yup, that old!), there is a good chance that they will! The only thing that can save the government is the Bank of England backing the plan and telling everyone they will!

So whilst its still very much a mess, economically the country is now aligned, and there is a chance… sadly, the UK is very vulnerable and if this policy change is ignored.. the odds of a General Election become very high, simply because a dramatic change will be needed to create a chance for confidence..

So watch the STG/USD exchange rate… everything is dependant and triggered by that!

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