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British Deficit Will Add More To Our Woes

April 28, 2010

David McWilliams is always worth a read, and today he warns that Britain’s huge deficit — remember their stimulus during the credit crash? — will put huge pressure on the value of Sterling. Unless the Euro follows it down, our goods will become more expensive in this hugely important market. Here’s how it ties in with our current mess:

Then the true lunacy of our Government’s policy becomes apparent. We are trying to slash prices and wages in the euro at a time when we are papering over the cracks with massive borrowing to save the banks. In the process, we strangle domestic indigenous exporters — who are supposed to be the saviours.

Meanwhile, the bond markets have racked up huge profits betting against Greece and are licking their lips as they look around for the next victim. The consensus is Portugal with Ireland not far behind. The Greeks were almost paying credit-card rates on their two-year bonds. Imagine the interest bill on “just” €1 billion? That would be €164 million for one year! In beautiful, downtown Ireland, we need to borrow €20 billion a year for day-to-day expenses, plus another €20-25 billion to flush down the toilet bailing out the banks.

A slide show of just how bad we are can be found at CNBC.

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2 Comments leave one →
  1. April 28, 2010 9:23 am

    Yes. Wonderful! Gosh who would have thought?

    All predictable! Cool that you are recording it for us! Do you think the Irish should be allowed to make decisions on borrowing a billion euro? How about ten billion? A hundred?

  2. April 28, 2010 11:10 am

    Thanks as always for the comments, Pat.

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