26 April 2023 - Unrealistic wage demands drive inflation higher
Bank of England Chief Economist Huw Pill, speaking on a podcast in the U.S. yesterday expressed his belief that the people of the UK need to wake up to the reality that they have no divine right to relative wealth. He believes that workers and firms should stop trying to pass on higher costs by raising prices or demanding higher wages. Until people accept that rising inflation has made them poorer, inflation will continue to rise. Simple economics shows that the UK as a significant importer of natural gas has seen its expense base rise exponentially, while its income from exports, mostly of services, has not risen as quickly. If the cost of what you're buying is rising faster than what you are selling, you are going to be worse off. This is causing the current flare up in inflation which is causing the Bank of England to continually hike short-term interest rates. Beyond Currency Market Commentary: Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.