With a high pound comes a fall in exports, as goods sent abroad get priced out by foreign rivals. And the prospect is that the Bank of
The Bank is expected to say that
The prospect of a rate rise next spring or summer is not only overriding many signs of economic weakness, especially in the labour market and retail sales, it is also politically tricky for the Bank, as the rise would come either just before or just after a general election. It puts at risk the first move in five years being damned as favouring one political party over another. The threat of protests at the doors of
Whichever date it picks between now and next summer, investors will want to put their money in British financial assets. Why? Because they will enjoy higher interest rate gains than they would on assets parked in
The Japanese have pledged to keep ultra-low interest rates almost forever while they engage in a money printing war with the US Federal Reserve, the
Should the Bank of
In the short term, there will be little reason to panic. A higher value currency means cheaper imports and cheaper foreign holidays. Lots of voters will look favourably at rocket bottom prices for flatscreen TVs and chalets in the south of Spain.
But the promised rebalancing of the economy from the property and financial sectors to manufacturing and making things will be torpedoed.
In a repeat of the early 2000s, when the
Each time there is a recession, manufacturers go bust, never to return. The
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