Is the UK struggling again?

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Lanzalad
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Is the UK struggling again?

Post by Lanzalad » January 5, 2015, 6:34 am

It seams be on the fall again..

The pound fell against the dollar for a third week, reaching a 16-month low, as reports showed growth in manufacturing and the housing market slowed, spurring bets the Bank of England will refrain from raising interest rates.

How much more will it drop.



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Is the UK struggling again?

Post by SJP17 » January 5, 2015, 9:46 am

In areas yes, but in my opinion the oil price will have a 50/50 effect good for some bad for others , I am fortunate to live in an area with one of lowest unemployment rates in the UK , though economics confuses the hell out of me !

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GT93
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Is the UK struggling again?

Post by GT93 » January 5, 2015, 12:28 pm

Is this thread about sterling or the UK economy? I understood the UK economy has been on its backside for many years. I understood the prospects for young Brits aren't that flash although that's quite common in the global economy these days. The US economy seems to nearly be back on its feet.

It's going to be interesting following the UK election this year. The pollies will no doubt be arguing about whether the UK is struggling.
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Is the UK struggling again?

Post by Earnest » January 5, 2015, 1:56 pm

GT93 wrote:I understood the UK economy has been on its backside for many years.
It would depend on how you define the economy being on its backside. We're out of the Euro zone and we're still growing...just. But we're in a better state than other nations. Why else do European economic migrants come here to work?
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Is the UK struggling again?

Post by parrot » January 5, 2015, 2:50 pm

I started the thread at http://www.udonmap.com/udonthaniforum/c ... on%20obama over 3 years ago.......because each leader took a different approach to solving a similar (at least what seemed to me) economic problem. As I'm pretty illiterate when it comes to economics, I'll leave it to the experts to decide which policy was best. Maybe it'd make a good book read.

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Is the UK struggling again?

Post by GT93 » January 5, 2015, 3:00 pm

Like Parrot I read Krugman in the New York Times as he at times touches on this comparison. Krugman isn't an austerity fan so he prefers Obama's approach.

A couple of interesting points there Earnest. It's probably not saying a lot to benchmark the UK against some of Europe's basket cases. Perhaps a better benchmark is against past British economic performance. I think I have this right - Krugman in the New York Times has said the UK has recovered more slowly from the global economic crisis than it did from the depression. That's probably where I was mainly sourcing that metaphor from. My impression from Krugman is that British GDP might still be less than what it was before the crisis or only just a little ahead now.

The economic migrant issue is interesting. You Brits will know more about this than me but here are my thoughts. The economic migrants will be seeking a country where they are more likely to get ahead. This probably means the doors are more closed at the bottom of the ladder in countries such as France than the UK. If the migrants studied English through say high school, that's also an incentive for them to head to an English speaking country. I think once there's a critical number of immigrants from a country like Poland in another European country such as the UK, then the Poles start employing each other and doing work for each other. This is what the Chinese do in NZ. It gets easier to get on the ladder and draws in even more Poles into the UK. So from a migrant perspective the UK seems to be a relatively good place. Life must be awfully difficult or with little hope where they come from.
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Is the UK struggling again?

Post by bignote1 » January 5, 2015, 8:05 pm

GT....I don't know Krugman and I haven't read the NYT article.
I do however know the UK CEBR (Centre for Economics and Business Research) and they reported in December that Britain has overtaken France to become the fifth largest economy. They give 2 reasons for this :-
Firstly a shake up of the national accounts last year showed the UK's downturn during the Great Depression was shorter and shallower than previously thought.
Secondly they reported (I think you might like this one) Britain's acceleration was also boosted by the inclusion of sex and drugs to UK growth. Apparently, the inclusion, of prostitution and drugs is now part of pan European accounting standards.
Official estimates show prostitution added £5.7 billion to the UK economy in 2013 (figures for 2014 not available yet) and illegal drugs about £6.6 billion
This allowed the UK to overtake France by a narrow margin and it interestingly says that they expect Britain to draw further ahead in future years and predict Britain will leapfrog the German economy by 2030 .Douglas McWilliams chief executive of the CEBR predicts dramatic changes taking place in the world's economic geography in the next 5-10 years.

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MrFixer
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Is the UK struggling again?

Post by MrFixer » January 5, 2015, 8:22 pm

I think the UK overall is far from struggling. In my own area (technology sector) a lot of jobs have been created over the past year and we are seeing significant inflows of well qualified graduates from EU countries such as France, where employment prospects are less favourable. If their English is good they seem to find jobs relatively quickly when they arrive in the UK.

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Is the UK struggling again?

Post by can123 » January 5, 2015, 9:01 pm

The UK is bound to be facing a struggle as the rest of Europe lags behind. The Euro is dropping in value and the pound is being dragged down, albeit more slowly, in consequence. Uncertainty caused by the upcoming election will give traders an excuse to attempt to push down the pound still further. Hopefully, as long as Labour are rejected by the electorate, there will be a major rebound and I expect the pound to rise sharply after May.

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Is the UK struggling again?

Post by bignote1 » January 5, 2015, 9:03 pm

I agree MF I spent Xmas and the New Year in Belgium and France and the celebrations were very muted whereas trying to buy Xmas presents in Magic and Sparkle etc the week before Xmas was a nightmare. Lots of money being spent in shops pubs and restaurants was a good sign. The technology sector in UK always has been innovative and I think will get better and better. Any technology stocks you can recommend worth checking out?

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Is the UK struggling again?

Post by rick » January 6, 2015, 10:49 pm

What is surprising is that with the UK's economy in slow but continuous growth, we have seen a decline in the pound/baht over the past 4 months, now lowest for 12 months - has slipped below 50 today .... doesn't make sense to me? It is not just because of the dollar.

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Is the UK struggling again?

Post by Zidane » January 8, 2015, 10:03 am

It is a little bit puzzling.I can only put it down to worries about the Eurozone affecting the pound or concerns about the forthcoming UK General Election that could result in a win for Labour (surely not :yikes: ) and/or the UK coming out of the European Union.
But,overall,I feel the UK economy is doing quite well.....certainly compared to other countries.

Maybe our financial expert,Jimbo,could give us his take on this ?? ;)
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Is the UK struggling again?

Post by JimboPSM » January 11, 2015, 10:45 pm

I have been guilty to some degree of wishful thinking about the UK economy – having originally been in favour of “austerity” I really wanted all the pain to show a gain, however despite all the pain inflicted (particularly on those least able to afford it, the middle class and poor), current economic data is showing that it has been to little or no avail.

To be fair to myself, I was not alone; with a few exceptions, pretty well all the financial and conservative controlled media was in bed with the idea of “austerity”.

With the benefit of hindsight, I gave far too much weight in previous comments to the “good economic news” from the media punditocracy while giving insufficient weight to the numerous contra-indications and reservations about the “recovery” in the UK economy expressed by deeper thinking economists.

Although the recent very marked fall in the pound started in mid 2014, its origins were a year earlier.

During 2013 an interesting contrast began to appear in the reporting of the performance of the UK and US economies, in the UK the media was generally hyping up the “good economic news” while in the US the media was generally seeking to undermine its improving economic news (it is interesting to speculate how the media might have reacted differently if Obama was white and a Republican and Cameron was black and Labour).

This contrast created a significant sentiment in the market that the BoE would be the first central bank to increase its interest rate and the US would be lagging far behind -the values of the pound and the dollar moved markedly reflecting this sentiment.

Moving on to 2014 it became increasingly obvious as the year progressed from the economic data from the UK and the US that the situation in both countries was actually the opposite to what had been portrayed by the media; however this was overtaken by events as the media moved to 24/7 coverage of the run-up to the Scottish referendum using shifts in the opinion polls between the Yes and No votes as the rationale behind movements in the pound – the possible impact on the pound of the Yes / No vote was even covered on UM :shock:

As a consequence of the media distortions that started in 2013 by the start of July 2014 the pound had already become overvalued and the dollar had become undervalued, so when reality set in and the pound began to fall it had much further to fall against the dollar than it might otherwise have done.

In my opinion, both the fall in the pound and the rise in the dollar have now overshot their fair market values – this is not particularly unusual as (more often than not) market corrections overshoot fair value, it would not be advisable for anyone to hold their breath waiting for a correction to the correction, comparatively they are often quite slow.

Due to the following exchange rate equation, any movement between the GBP and USD automatically flows through to being a movement between the GBP and THB:

  • GBP/USD x USD/THB = GBP/THB
[/b]
As can be seen in the following GBP/USD and GBP/THB charts the fall over the last 6 months has been quite dramatic, at one stage last week the GBP had lost over an eighth of its value against the USD since its peak in early July 2014.
  • GBP / USD
    GBP-USD daily 2015.01.09.jpg
    GBP / THB
    GBP-THB daily 2015.01.09.jpg
This chart gives a longer term perspective of the pound against the dollar where it can be seen that since 2009 the pound struggled every time it rose above 1.60. The impact of all the pro UK economy hype and all the anti Obama hype can be seen from mid 2013 to mid 2014.
  • GBP / USD
    GBP-USD daily 2015.01.09-B.jpg
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Earnest
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Is the UK struggling again?

Post by Earnest » January 11, 2015, 11:06 pm

So you're saying that the UK government and Media talked up the British economy recovery last year in comparison to a more conservative approach by their US counterparts.

This caused an overvalue of the GBP against the USD, which we saw in the GBP/Baht Exchange rate. Now there's been a correction, we've seen the GBP drop against the Baht. But you expect a degree of recovery?

On another related note, how do you see the Euro affecting the GBP and UK economy in 2015?
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Is the UK struggling again?

Post by Jing Jing » January 12, 2015, 10:27 am

I'm convinced the media has no clue as to what is happening in the economy. They are only coping and pasting information with zero verification. The major economic problem in the the world's economy is the use of derivatives by the major banks. What derivatives have done is distort and created an Unregulated Global Casino for Banks.The 9 Biggest Banks' Derivative Exposure - $228.72 Trillion. If the derivative m̶a̶r̶k̶e̶t̶ casinocrashes its game over for all of us.

Apparently the FOREX exchange is just as manipulated.
BP may be tarred in global forex rigging scandal
Bloomberg | 04 January, 2015 00:00

thaiguzzi
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Is the UK struggling again?

Post by thaiguzzi » January 12, 2015, 10:43 am

In a word - no. Everyone i talk to, is doing well, especially in engineering, fabrication, boat building etc.

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