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Economy 2022 13:22 - Oct 27 with 3992 viewsDale_4_Life

Inflation rising quickly...

House prices ridiculous combined with 6% fixed rate mortgages.

£4000 a year projections for a year supply of gas and electric

Some Spanish lager in a pub £5.50 a pint last week.

£7+ for a tub of butter....

£100 to fill up a family car..

Can this dismal Economy get better quickly or are we totally in the poop for quite some time to come? It feels like the country gone to ratshite in the blink of an eye.

Russian invasion and Brexit created a perfect storm it's time we started looking after ourselves and become self sufficient any money saving hints or tips please share.
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Economy 2022 on 13:47 - Oct 27 with 3931 viewsDalenet

Times are tough Dale 4 Life but we have been here before many times. The 1990s weren't easy (mortgage rates 12%) and we needed candles to light our homes at the end of Callaghans government.

Mortgage rates are up because swap rates shot up in anticipation of rising bank base rates. Central Banks use interest rates to tackle inflation and those with debt pay that price. The good news is that the yield curve has flattened for now and so fixed rate mortgage rates should settle around 5-6% - although you can get variable rate deals below 4% if you want to take some risks on when base rate may rise further. Base Rate is forecast to rise to c3.5% next year - still way below the 30 year average for the period 1980-2010. Of course we have been hooked on super low rates for the last 10 years.

Food inflation is reportedly 15%. But buy wisely and eat with the seasons. BBC said pasta had risen 65%. But Tesco's cheapest pasta is 23p - and increase of 3p in 5 years. Nobody needs to spend £7 on butter - own label products are half the price. But good that farmers are now being paid properly for milk (farmgate prices up 45% this year) and that means we pay more for milk, butter, cheese etc. But eat British veg and eat with the seasons where prices are cheaper. We seem to be importing less food today than we did 4 years ago (I presume Brexit impact).

If you have a spare room rent it out tax free. Every Little Helps

The war has created the energy and fuel price issues. We are stuck with that until we invest in alternatives or the west takes more action on Putin.

Best solution to cope is to ask for a pay rise. Average pay awards in the private sector are 6% - but you should ask for 10% and see what happens.

But our problem as a nation is that we don't save enough and we live for today. Few people have a buffer and nor does the Government.
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Economy 2022 on 14:11 - Oct 27 with 3866 viewsD_Alien

Economy 2022 on 13:47 - Oct 27 by Dalenet

Times are tough Dale 4 Life but we have been here before many times. The 1990s weren't easy (mortgage rates 12%) and we needed candles to light our homes at the end of Callaghans government.

Mortgage rates are up because swap rates shot up in anticipation of rising bank base rates. Central Banks use interest rates to tackle inflation and those with debt pay that price. The good news is that the yield curve has flattened for now and so fixed rate mortgage rates should settle around 5-6% - although you can get variable rate deals below 4% if you want to take some risks on when base rate may rise further. Base Rate is forecast to rise to c3.5% next year - still way below the 30 year average for the period 1980-2010. Of course we have been hooked on super low rates for the last 10 years.

Food inflation is reportedly 15%. But buy wisely and eat with the seasons. BBC said pasta had risen 65%. But Tesco's cheapest pasta is 23p - and increase of 3p in 5 years. Nobody needs to spend £7 on butter - own label products are half the price. But good that farmers are now being paid properly for milk (farmgate prices up 45% this year) and that means we pay more for milk, butter, cheese etc. But eat British veg and eat with the seasons where prices are cheaper. We seem to be importing less food today than we did 4 years ago (I presume Brexit impact).

If you have a spare room rent it out tax free. Every Little Helps

The war has created the energy and fuel price issues. We are stuck with that until we invest in alternatives or the west takes more action on Putin.

Best solution to cope is to ask for a pay rise. Average pay awards in the private sector are 6% - but you should ask for 10% and see what happens.

But our problem as a nation is that we don't save enough and we live for today. Few people have a buffer and nor does the Government.


Good analysis, but no mention of Covid and the expenditure to keep as much of the economy viable as possible during the trauma, hence the markets taking fright when uncosted reductions in taxes are announced - hopefully on safer ground now, including plans to gradually reduce overall debt levels to be announced next month. There was always going to be a 'payback' time for this, and then the invasion of Ukraine happened: Putin's timing was no accident

Every advanced economy is in pretty much the same boat, but somehow the media seem to give the impression the UK is some kind of basketcase, which it clearly isn't (poor recent management aside). It's in the interests of the media to keep people clicking by 'announcing' new 'horrors' every day, when real horrors are taking place on the European mainland
[Post edited 27 Oct 2022 14:13]

Poll: What are you planning to do v Newport

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Economy 2022 on 14:13 - Oct 27 with 3861 viewsA_Newby



With regards to the energy prices. The wholesale price of gas has come down significantly but has not "worked its way through the system". The average family household estimates were based on the recent very high wholesale prices of gas and so are likely to be lower. This is part of the reason that Sunak is waiting a couple of weeks before he announces what will happen in his mini budget.

If under Sunak there are rapid improvements in our economy it will because he has this "fortuitous" circumstance to thank and not necessarily due to anything he does.
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Economy 2022 on 14:48 - Oct 27 with 3777 views49thseason

European inflation..
https://www.statista.com/statistics/225698/monthly-inflation-rate-in-eu-countrie

Must be Brexit wot dun it. Or them there earthquakes caused by Fracking.... or maybe we are simply living beyond our means

"Public sector net debt excluding public sector banks (PSND ex) was £2,427.5 billion at the end of August 2022, or around 96.6% of gross domestic product (GDP), which was an increase of £195.2 billion or 1.9 percentage points of GDP compared with August 2021." So net debt written another way is £2,427,500,000,000
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Economy 2022 on 15:11 - Oct 27 with 3735 viewsA_Newby

Dalenet said

“Few people have a buffer and nor does the Government.”

This is a major part of the problems we have experienced over the last years.

If you have worked in manufacturing or retail for over 30 years you will be aware that buffers e.g. warehouses of raw materials or finished goods were slowly removed.

Instead there has been a reliance on a concept of “just in time” supplies. In this raw materials or products go straight from the supplier to the shop floor to be processed and then are supplied straight to the customer. There is no buffer in between.

Whilst this is very efficient and keeps prices down it is not very robust and anything can cause a whole production line to shut down, something as simple as a train strike or bad weather (never mind a war!) can disrupt the “supply chain”.

When this happens there is a shortage and panic buying can cause prices to rise.

The odd thing (which some people will not like me saying) is that Brexit actually eased this problem a little and made some production systems more robust. Worries about the difficulties with delays in supply chains from the EU caused many companies to recreate stockpiles or buffers. Whilst this increased prices a little it made their overall systems more robust.

These buffers should have been in place with or without Brexit.

There is a trade-off between price of goods and security of supply and it had gone too far towards having lower prices.
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Economy 2022 on 15:21 - Oct 27 with 3703 viewsD_Alien

Economy 2022 on 15:11 - Oct 27 by A_Newby

Dalenet said

“Few people have a buffer and nor does the Government.”

This is a major part of the problems we have experienced over the last years.

If you have worked in manufacturing or retail for over 30 years you will be aware that buffers e.g. warehouses of raw materials or finished goods were slowly removed.

Instead there has been a reliance on a concept of “just in time” supplies. In this raw materials or products go straight from the supplier to the shop floor to be processed and then are supplied straight to the customer. There is no buffer in between.

Whilst this is very efficient and keeps prices down it is not very robust and anything can cause a whole production line to shut down, something as simple as a train strike or bad weather (never mind a war!) can disrupt the “supply chain”.

When this happens there is a shortage and panic buying can cause prices to rise.

The odd thing (which some people will not like me saying) is that Brexit actually eased this problem a little and made some production systems more robust. Worries about the difficulties with delays in supply chains from the EU caused many companies to recreate stockpiles or buffers. Whilst this increased prices a little it made their overall systems more robust.

These buffers should have been in place with or without Brexit.

There is a trade-off between price of goods and security of supply and it had gone too far towards having lower prices.


Correct. Governments and businesses had all become very complacent that the "just in time" philosophy would continue working ad infinitum. Current circumstances are forcing a much-needed and ultimately beneficial rethink, making us less vulnerable to malign actors

Plus, some balance from the BBC about the likelihood of houseprices stabilising and possibly falling (although that's presented in a negative light, too!):

https://www.bbc.co.uk/news/business-63411783
[Post edited 27 Oct 2022 15:23]

Poll: What are you planning to do v Newport

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Economy 2022 on 15:36 - Oct 27 with 3661 viewsJames1980

The gap between wages and the cost of a place to live is much wider than in the 80s and 90s. So the impact of an interest rate rise is going to be more acute.

'Only happy when you've got it often makes you miss the journey'
Poll: What does Jim need ?

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Economy 2022 on 16:43 - Oct 27 with 3528 viewsBigKindo

Economy 2022 on 14:48 - Oct 27 by 49thseason

European inflation..
https://www.statista.com/statistics/225698/monthly-inflation-rate-in-eu-countrie

Must be Brexit wot dun it. Or them there earthquakes caused by Fracking.... or maybe we are simply living beyond our means

"Public sector net debt excluding public sector banks (PSND ex) was £2,427.5 billion at the end of August 2022, or around 96.6% of gross domestic product (GDP), which was an increase of £195.2 billion or 1.9 percentage points of GDP compared with August 2021." So net debt written another way is £2,427,500,000,000


Interesting that The Netherlands, Germany and Belgium are all experiencing higher levels of inflation that the UK.
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Economy 2022 on 17:11 - Oct 27 with 3453 viewsjudd

Economy 2022 on 15:11 - Oct 27 by A_Newby

Dalenet said

“Few people have a buffer and nor does the Government.”

This is a major part of the problems we have experienced over the last years.

If you have worked in manufacturing or retail for over 30 years you will be aware that buffers e.g. warehouses of raw materials or finished goods were slowly removed.

Instead there has been a reliance on a concept of “just in time” supplies. In this raw materials or products go straight from the supplier to the shop floor to be processed and then are supplied straight to the customer. There is no buffer in between.

Whilst this is very efficient and keeps prices down it is not very robust and anything can cause a whole production line to shut down, something as simple as a train strike or bad weather (never mind a war!) can disrupt the “supply chain”.

When this happens there is a shortage and panic buying can cause prices to rise.

The odd thing (which some people will not like me saying) is that Brexit actually eased this problem a little and made some production systems more robust. Worries about the difficulties with delays in supply chains from the EU caused many companies to recreate stockpiles or buffers. Whilst this increased prices a little it made their overall systems more robust.

These buffers should have been in place with or without Brexit.

There is a trade-off between price of goods and security of supply and it had gone too far towards having lower prices.


Add to that the over-extended supply chain reliant on (especially) Chinese manufactured goods, the shipping container shortages and 400% plus increases in shipping costs, so a sudden rush source closer to home materials at a higher price have all had an effect.

Poll: What is it to be then?

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Economy 2022 on 18:12 - Oct 27 with 3351 viewstony_roch975

Economy 2022 on 16:43 - Oct 27 by BigKindo

Interesting that The Netherlands, Germany and Belgium are all experiencing higher levels of inflation that the UK.


whilst Portugal, Italy, Cyprus, Spain. Luxembourg, Ireland, Finland, Malta, France are all lower

Poll: What sort of Club do we want - if we can't have the status quo

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Economy 2022 on 18:14 - Oct 27 with 3349 viewstony_roch975

Economy 2022 on 15:36 - Oct 27 by James1980

The gap between wages and the cost of a place to live is much wider than in the 80s and 90s. So the impact of an interest rate rise is going to be more acute.


and the gap between the rich and the poor has risen continuously since 1979

Poll: What sort of Club do we want - if we can't have the status quo

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Economy 2022 on 18:36 - Oct 27 with 3298 viewsA_Newby

Back to “buffers” and UK energy (gas) supplies.

In 2017 the UK closed its main gas storage facility. This was the Rough (its name) field just off the Yorkshire coast where we stored 70% of our gas reserves.

With “going green” we would not need this anymore as we transitioned from gas to renewables and closing it would save the UK government “£750 million over ten years” (£75 million a year).

At full capacity the Rough storage facility could supply the excess gas used in winter for around 75 days.

As we closed the storage facility before we had completely transitioned to renewables, we would use “just in time” gas supplies 50% from our own North Sea production, about 30% from Norway, 4% from Russia via a pipeline between the UK and Belgium.

The remainder would come as liquid national gas (LNG) from the USA and Qatar.

Now since 2017 after we had closed the Rough storage facility we needed somewhere to store our excess gas production from the summer. So, we used the undersea pipeline to Belgium to send it across to storage facilities in the EU, mainly Germany.

We would then reimport supplies along the same pipeline in the winter months as we needed it.

When the Ukraine invasion took place and Russian gas supplies were “cut off”, the EU particularly Germany and Italy who relied on Russia for over 40% of their gas supplies, started sourcing more gas from Norway and LNG from around the world pushing up the price massively.

This was especially true of Germany which was trying to fill its storage facilities with several months’ supply to last through the winter.

Also, since the Ukraine invasion we have been “exporting” even more gas across to Germany than in previous years. This is not really “our” gas, it is LNG purchased by Germany from Qatar and the USA.

The reason it went through the UK is that Germany did not have any LNG delivery and processing facilities of its own (it now has some temporary floating LNG processing facilities off the German coast).

Now this winter we will be looking to reimport some gas from storage in the EU (Germany). We are reliant on their “goodwill” to re-export this.

During the pandemic when there was a shortage of PPE both Germany and France banned its export, even to other EU countries.

Although the gas supply issues have eased somewhat, if this had not been the case the EU (Germany) would have had to decide whether to export gas back to the UK and possibly suffer power cuts there or whether to just “keep” the gas for themselves.

The Rough storage facility was reopened at the end of August and hopefully will be able to run at 25% capacity over this winter and even higher next year as it is gradually de-mothballed.

It should never have been closed until it was no longer needed.

We cannot be dependent on even “friendly” international actors. We need robustness and reliability in our energy supply chains even if that means that the price we have to pay is slightly higher.

If anybody is interested this site gives, in an easy-to-understand way, the amount of electricity generated (live) and used in the UK and what energy source is used to produce it.

https://grid.iamkate.com/
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Economy 2022 on 18:37 - Oct 27 with 3292 viewsJames1980

Economy 2022 on 18:14 - Oct 27 by tony_roch975

and the gap between the rich and the poor has risen continuously since 1979


Ah yes the 'wealth creators' or should that be hoarders.

'Only happy when you've got it often makes you miss the journey'
Poll: What does Jim need ?

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Economy 2022 on 19:18 - Oct 27 with 3200 views49thseason

Economy 2022 on 18:12 - Oct 27 by tony_roch975

whilst Portugal, Italy, Cyprus, Spain. Luxembourg, Ireland, Finland, Malta, France are all lower


Energy is less of a problem for the Mediterranean countries as they are generally warmer and have lower industrial needs , Ireland is dependent on UK gas and refuses to use allow the further development of huge gas fields ( Corrib) offshore Ireland, some of which are running out. France of course has mainly Nuclear power some of which they currently export to the UK. Finland has a eclectic mix of Nuclear, community heating (steam from ground sources ) and ...peat!
The Med countries also have more home grown and locally grown food.
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Economy 2022 on 19:33 - Oct 27 with 3178 views49thseason

Economy 2022 on 18:37 - Oct 27 by James1980

Ah yes the 'wealth creators' or should that be hoarders.


Rich people do not keep their money under the mattress James, they buy stuff like cars and houses, offices and factories, they invest in businesses and even their savings are recycled by bank as loans to others, indeed, one of our biggest problems over the last 10-15 years has been low interest rates and fractional banking where non existant money is loaned out multiple times for mortgages, business loans and the rest. The world-wide banking system is effectively bankrupt as they dont have enough money to cover the amounts they have loaned by many multiples, Deutsche Bank is the canary in the coalmine as it has "derivatives" greater than the total world money supply ...something like 32 trillion Dollars . The DB share price has collapsed since 2008 and is currently propped up by Qatari oil money if DB was to go bust most of the other banks would go with it influding Barclays. Dozens of Italian banks are in the same state. Lehman Brothers showed what might happen, nothing has been done since then to fix the problem. It will be like dominoes! Buy some gold!
[Post edited 27 Oct 2022 20:45]
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Economy 2022 on 22:44 - Oct 27 with 2974 viewsDalenet

Economy 2022 on 19:33 - Oct 27 by 49thseason

Rich people do not keep their money under the mattress James, they buy stuff like cars and houses, offices and factories, they invest in businesses and even their savings are recycled by bank as loans to others, indeed, one of our biggest problems over the last 10-15 years has been low interest rates and fractional banking where non existant money is loaned out multiple times for mortgages, business loans and the rest. The world-wide banking system is effectively bankrupt as they dont have enough money to cover the amounts they have loaned by many multiples, Deutsche Bank is the canary in the coalmine as it has "derivatives" greater than the total world money supply ...something like 32 trillion Dollars . The DB share price has collapsed since 2008 and is currently propped up by Qatari oil money if DB was to go bust most of the other banks would go with it influding Barclays. Dozens of Italian banks are in the same state. Lehman Brothers showed what might happen, nothing has been done since then to fix the problem. It will be like dominoes! Buy some gold!
[Post edited 27 Oct 2022 20:45]


Not sure I agree wiith the inference that banks can't manage the risk around debt. UK and most domestic EU banks are now significantly better capitalised and have much stronger liquidity than they did in 2008. There is no sign of domestic banking arrears as yet as there is full employment. DB haven't recovered in the same way other banks have, but their problems were systemic.

Lloyds Bank has today announced that they think house prices may fall 8-10% as we fall into recession. Under their PRA regime they need to show that they have made provisions to cope with the stress of a downturn. It doesn't mean it will happen - they did the same at the start of covid and then unwound the provisions. But the media covered it to try and spook people.....the BBC believes we are all doomed.

As for comments by other posters, there is no doubt that high inflation and hgh national debt were driven by external factors. But as a nation people have begun to expect the state to step in for everything that happens to them - but the state has no money and only higher taxes will allow them to do that. Borrowing for capital investment is one thing, but borrowing to manage day to day management is another.

We'll come out the other side in a couple of years and will be fine. But will we learn from the decisions not to force the now private energy system to maintain stores of oil and gas? In the same way we allowed the water companies to sell off reservoirs for housing. France and Germany better understand the need to maintain some degree of regulation of critical services. I fear that we will forget everything as soon as the sun shines
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Economy 2022 on 07:03 - Oct 28 with 2786 viewsnordenblue

Economy 2022 on 22:44 - Oct 27 by Dalenet

Not sure I agree wiith the inference that banks can't manage the risk around debt. UK and most domestic EU banks are now significantly better capitalised and have much stronger liquidity than they did in 2008. There is no sign of domestic banking arrears as yet as there is full employment. DB haven't recovered in the same way other banks have, but their problems were systemic.

Lloyds Bank has today announced that they think house prices may fall 8-10% as we fall into recession. Under their PRA regime they need to show that they have made provisions to cope with the stress of a downturn. It doesn't mean it will happen - they did the same at the start of covid and then unwound the provisions. But the media covered it to try and spook people.....the BBC believes we are all doomed.

As for comments by other posters, there is no doubt that high inflation and hgh national debt were driven by external factors. But as a nation people have begun to expect the state to step in for everything that happens to them - but the state has no money and only higher taxes will allow them to do that. Borrowing for capital investment is one thing, but borrowing to manage day to day management is another.

We'll come out the other side in a couple of years and will be fine. But will we learn from the decisions not to force the now private energy system to maintain stores of oil and gas? In the same way we allowed the water companies to sell off reservoirs for housing. France and Germany better understand the need to maintain some degree of regulation of critical services. I fear that we will forget everything as soon as the sun shines


Agree with most of that, I listen to several "experts" in property, very regularly and many if not all are predicting a massive drop in the housing market, its like the perfect storm it seems, the natural cycle for a drop "should be" around 2/3 years away from the last one in 2008,though most believe this is amplified by recent events and will happen much sooner it seems.

Interesting times for sure, even more so with another remortgage due just before Christmas....
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