If you look at the graphs for GBPUSD and EURUSD on year timeframes they are very similar. I am not an economist but to me it seems like the various Europe crises around energy, war, covid etc have the main effect and the media is just focusing on UK specific politics and monetary policy because it changed recently and gets clicks.
Ask HN: What Is Happening in the UK?
41–50 of 234 posts
Re: Ask HN: What Is Happening in the UK?
#42Our government announced new economic policies that have been judged extremely harshly by everyone. The public perception of them is also severely negative which increases the risk of the alternative party gaining control next time around. I really hoped the new leader would be the one with an economics background instead of the friendly optimist. Navigating out of brexit and covid is difficult and the leader sets th…
> Hopefully the people who chose Truss have made enough of a loss this week to reconsider their priorities.
Except Kwarteng's former boss Crispin Odey is making a killing shorting the pound. https://www.independent.co.uk/news/uk/politics/tory-donor-pr...
Re: Ask HN: What Is Happening in the UK?
#43Led by the US, the entire world is in a debt spiral, and just like many of the systems that sustain modern civilization, the global economy itself is in various stages of unraveling from its unsustainable path [1] [1] - https://lookingglasseducation.com/whats-a-debt-spiral-and-is...
A little to coarse, since OP asked about the UK. But Obama already acknowledged that the US will never pay back all their debt, "even if they get 10% GDP increase per year for every single year" if I am not mistaken about that non-verbatim quote.
Not paying off all the debt and defaulting on debt are vastly different things.
Re: Ask HN: What Is Happening in the UK?
#44Genuine question: why are markets disapproving of the economics policy decided by a ... right-wing governement ? I though markets reacted negatively to socialist governments getting into power, not the opposite.
The counter factual where a left wing government does something this stupid is hard to imagine because the press and markets normally go so apeshit at even minor transgressions of neo liberal orthodoxy that we never get that far.
Re: Ask HN: What Is Happening in the UK?
#45Led by the US, the entire world is in a debt spiral, and just like many of the systems that sustain modern civilization, the global economy itself is in various stages of unraveling from its unsustainable path [1] [1] - https://lookingglasseducation.com/whats-a-debt-spiral-and-is...
A little to coarse, since OP asked about the UK. But Obama already acknowledged that the US will never pay back all their debt, "even if they get 10% GDP increase per year for every single year" if I am not mistaken about that non-verbatim quote.
That quote doesn't surprise me, politicians are stuck between a rock and a hard place without any real options to solve systemic issues. Just like with climate collapse, the solutions that tackle the problems at their core require what is effectively political suicide.
Re: Ask HN: What Is Happening in the UK?
#46Truss and Kwarteng are really fast! As emptywheel said, usually it takes conservatives a matter of years to create the financial crisis they must then intervene to fix.
Sorry but this isn't the place for politics. HN is our last refuge from the shitstorm of political unrest on every other site. Reddit, Twitter, and Facebook are available though.
Re: Ask HN: What Is Happening in the UK?
#47Earlier quoted context omitted.
> the wealthiest 1% are paying 28% of income tax receipts - and this percentage has increased over the last decade Without any information on how wealth inequality has increased, and the 1% have more income and assets now than they did last decade, this is misleading at best. If the top 1% are paying more taxes but are also making more money, this hardly seems unfair.
So you think 1% of people shouldering 28% of the cost of public services is fair?
Actually it's not too crazy as the top 1% own about 20% of the total wealth
> The wealthiest 1% of households hold about 20% of household wealth, the top 5% of hold approximately 40%, and the top 10% hold over 50% of wealth
https://ifs.org.uk/articles/distribution-household-wealth-uk
If you don't tax them they just amass more and more money without contributing more, if anything their wealth is due to the work of the bottom xx% of society that work for these ultra rich families
Re: Ask HN: What Is Happening in the UK?
#48In the short-term, the factors well described by others above.
In the longer-term, is it the slow accumulation of a thousand cuts?
-- Brexit
-- Stagnating physical output of UK industry (aside from finance + healthcare)?
-- Aging population
-- Expensive living costs + recent inflation
I don't know how much each of these factors has contributed, or if there are other important factors missing above. But for me, having lived there and seen the general situation, the question is, how will the UK renew itself as a country from a long century of gradual decline?
Re: Ask HN: What Is Happening in the UK?
#49In simple terms, the Bank of England and UK Gov are pursuing conflicting economic policies, BoE trying to take money out of circulation through hiking up interest rates, whilst UK Gov is putting money into circulation by proposing massive debt funded tax cuts. The obvious incoherency of this then led to the markets losing confidence in the UK economy, crashing the value of the pound, which in turn makes the planned U…
Between the tax cuts and the energy-price guarantee, the bigger problem is the energy-price guarantee that has been announced by the government. It will put a cap on fuel prices for consumers and the resulting deficit is planned to be funded by the treasury. The deficit is estimated to be more than 100 Billion pounds, and it is planned to be funded by government borrowing. This has resulted in a weaker pound.
I believe it is up to £150 Billion, and yes does indeed contribute to the weakening of the pound. However, orthogonal factors like Fed Reserve interest rate hike has larger effect, as great deal of debt is denominated in USD
Re: Ask HN: What Is Happening in the UK?
#50The pound is low against the dollar, as is the Euro low against the dollar. The pound dropped in value a few days ago, but the price has recovered since then. The media chooses to focus on the drop rather than the recovery, because the drop coincided with a government announcement of some pro-growth economic policies that mainstream pundits disagree with. If you speak to people in the U.K. many would agree that payin…
Quite frankly, you are hugely privileged to be earning at that level. The median average salary in the UK is just under £26k. Also, when you are that income level, there are a number of tax benefits you can enjoy - for example the first £40k you put into your pension is before tax - so it effectively reduces your salary (for tax purposes) by £40k. SO if you are doing the sensible thing and putting money into a pensio…
Seems potentially relevant that some pension companies were looking at defaulting from margin calls this week. I'm not totally confident that money put into pension schemes is going to be there later.