So is this a fair summary of the current UK economy?
Inflation up
House prices stalled, about to drop
Personal credit only plateauing
Unemployment up
High street spending down
Energy prices up
Is this all happening about 18 to 24 months after the first set of oil price increases, much as people expected going on previous oil price rises / economic impact situations?
So is this a fair summary of the current UK economy?
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PowerSwitchJames
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Re: So is this a fair summary of the current UK economy?
I think so.PowerSwitchJames wrote:So is this a fair summary of the current UK economy?
Inflation up
House prices stalled, about to drop
Personal credit only plateauing
Unemployment up
High street spending down
Energy prices up
Weren't previous oil price rises more like spikes than this slow climb? So, we haven't really seen anything like this before?PowerSwitchJames wrote: Is this all happening about 18 to 24 months after the first set of oil price increases, much as people expected going on previous oil price rises / economic impact situations?
Peter.
I think you need to be careful about comparing the likely economic effects of todays oil price rises with those of the oil shocks of the 1970s.
Some key things that are different:
1. The reason for the price rises.
2. The speed with which they're happening.
3. The agendas of the oil producing nations (i.e. the fact that they've invetsed so much capital in Western assets).
4. Stricter monetary policy.
5. Higher level of consumer debt in the economy.
6. "Lower friction" labour markets.
7. The degree of transport between manufacturers and consumers.
8. The globalisation of the economy.
9. The outsourcing of manufacturing to nations with cheaper labour.
10. Greater degree of technology in the economy.
11. Higher emphasis on services.
The list goes on. Oil shortages will inevitaly give rise to increasingly adverse economic conditions, but I don't expect it to happen in the same way it did in the 70's. I don't know how it'll happen, but it does seem that in some ways our economy is more resilient to energy price rises than in the past and in other ways it's more vulnerable.
If it is a slow slide into recession/depression rather than a crash, this will presumably have both beneficial and negative effects: for the people who know what's happening it could buy them enough time to prepare for it effectively; but it will also allow others to keep living in denial for years, thinking it's just part of the normal cycle of recession and growth.
I also think that the fact that the initial economic symptoms are likely to be different will allow economists, oil companies and governments more scope to cloud the issue for individual benefit, use it to lay blame at the door of others for short term polictical gains etc. Some might argue that this is what's happening already...
Ultimately, the economy will inevitably go down the pan and the kinds of indicators James mentioned will no doubt all show the effects. Is the fact that these indicators are currently suggesting a slowdown purely attributable to oil & gas prices? I'm not so sure. I think that Brown's economy was - to a large extent - a house built on sand anyway; oil prices are just another squeeze on it - for now.
Some key things that are different:
1. The reason for the price rises.
2. The speed with which they're happening.
3. The agendas of the oil producing nations (i.e. the fact that they've invetsed so much capital in Western assets).
4. Stricter monetary policy.
5. Higher level of consumer debt in the economy.
6. "Lower friction" labour markets.
7. The degree of transport between manufacturers and consumers.
8. The globalisation of the economy.
9. The outsourcing of manufacturing to nations with cheaper labour.
10. Greater degree of technology in the economy.
11. Higher emphasis on services.
The list goes on. Oil shortages will inevitaly give rise to increasingly adverse economic conditions, but I don't expect it to happen in the same way it did in the 70's. I don't know how it'll happen, but it does seem that in some ways our economy is more resilient to energy price rises than in the past and in other ways it's more vulnerable.
If it is a slow slide into recession/depression rather than a crash, this will presumably have both beneficial and negative effects: for the people who know what's happening it could buy them enough time to prepare for it effectively; but it will also allow others to keep living in denial for years, thinking it's just part of the normal cycle of recession and growth.
I also think that the fact that the initial economic symptoms are likely to be different will allow economists, oil companies and governments more scope to cloud the issue for individual benefit, use it to lay blame at the door of others for short term polictical gains etc. Some might argue that this is what's happening already...
Ultimately, the economy will inevitably go down the pan and the kinds of indicators James mentioned will no doubt all show the effects. Is the fact that these indicators are currently suggesting a slowdown purely attributable to oil & gas prices? I'm not so sure. I think that Brown's economy was - to a large extent - a house built on sand anyway; oil prices are just another squeeze on it - for now.
James,
Did you not see panorama (Brown's miracle economy) last sunday eve?
You can add these:
Savings rates dropped (For more info, see Dr. Bubb on HPC or his blog).
Housing could already be off the end of the cliff.
The reason we haven't already had a correction is due to increasing global trade with it's cheap imports (i.e. China growth). This is, however, a one time "bounty" which we never have again. (And of course will bite us in the derrier due to peak oil!)
The other side of this is all the jobs gone from manufacturing are now in the public sector. So we have a large section of workforce sustained only by taxation, and a shortage of skills and experience in making things.
Add to that, high street chains reports like these are becoming more frequent:
Blood on the shop floor as retailers report sales falling at the fastest rate since records began
Yet more blood on the high street
In fact, looking around, I think I've been seeing quite a lot more sales going on than usual too. I think I'd seen "temporary deflation, followed by inflation" predicted for peak oil somewhere before. This might be happening. This xmas should be interesting for the shops!
Although I couldn't put figures to it, I'd bet more jobs are going now than being created, so it'll be worthwhile watching the official stats on that over the next 6-12 months.
Did you not see panorama (Brown's miracle economy) last sunday eve?
You can add these:
Savings rates dropped (For more info, see Dr. Bubb on HPC or his blog).
Housing could already be off the end of the cliff.
The reason we haven't already had a correction is due to increasing global trade with it's cheap imports (i.e. China growth). This is, however, a one time "bounty" which we never have again. (And of course will bite us in the derrier due to peak oil!)
The other side of this is all the jobs gone from manufacturing are now in the public sector. So we have a large section of workforce sustained only by taxation, and a shortage of skills and experience in making things.
Add to that, high street chains reports like these are becoming more frequent:
Blood on the shop floor as retailers report sales falling at the fastest rate since records began
Yet more blood on the high street
In fact, looking around, I think I've been seeing quite a lot more sales going on than usual too. I think I'd seen "temporary deflation, followed by inflation" predicted for peak oil somewhere before. This might be happening. This xmas should be interesting for the shops!
Although I couldn't put figures to it, I'd bet more jobs are going now than being created, so it'll be worthwhile watching the official stats on that over the next 6-12 months.
I was very disappointed at that Panorama programme, they made it look at though oil was going to be discussed on the trailer, but just mentioned "high oil prices" in the programme. I was hoping they'd say whether they thought it's a "temporary blip" or something long term.
I can see how Raleigh buying bikes from the far east is good for their business. But surely money is still going out of the country, whether people buy "Raleigh's Indian bikes" or whether they buy Indian bikes directly?
I can see how Raleigh buying bikes from the far east is good for their business. But surely money is still going out of the country, whether people buy "Raleigh's Indian bikes" or whether they buy Indian bikes directly?
Olduvai Theory (Updated) (Reviewed)
Easter Island - a warning from history : http://dieoff.org/page145.htm
Easter Island - a warning from history : http://dieoff.org/page145.htm
Fuel Poverty up.
Link
Link
Energy firms told to do more to tackle rise in fuel poverty
? the number of people facing fuel poverty has risen by 400,000, according to Department of Trade and Industry estimates, following recent price increases
?
The energy minister called for a collaboration between the government, energy companies, local authorities and voluntary organisations to tackle the problem.
"Some of those edged into fuel poverty by recent price changes will be relatively easy to move out of it - and may be relatively easy to reach. But the hard core of fuel poor risk either worse financial circumstances or imperilling their health and wellbeing by living in inadequately heated homes."