Friday, 24 June 2016

So the Lemmings have jumped off the cliff

I am not surprised by the result this morning; nor am I too surprised by the crash in the Pound. According to the Brext camp this was not going to happen!

I wonder what else of the warnings made by the remain team will come true? I hope the most serious do not, but suspect that they will. A run on the Pound may well precipitate a rise in interest rates. If, as Standard and Poor have said, the UK's AAA rating is lost, then that too indicates that rates will have to rise. Meanwhile, a 10% drop in the Pound must mean an increase in prices, especially of fuel and imported commodities and food. Likewise, other imported goods will rise in price

So, at last, inflation will start to re-emerge as an economic shadow. For the saver reliant on interest rates to provide an income that may well be no bad thing, but for home owners with big mortgages that is a real shadow on the horizon. If rates rise significantly there is quite a serious risk of a rise in mortgage defaults and a decline in house prices. Maybe such a decline would be a good thing, but the economy is frightfully closely linked to house prices, so I think the chances of us avoiding another recession in the near future are diminishing.

As Sir John Major commented just a couple of days ago, a Brexit vote will mean that the chickens will come home to roost for those in the leave camp who so rubbished Remain's economic concerns. I cannot see how David Cameron can continue as PM, especially given the calls for George Osborne's head. Both Cameron and Osborne subscribed to the same economic predictions and Cameron can hardly sack Osborne and keep his reputation for being a man of principle - blaming the cook when the butler has spiked the curry is not the done thing!

Well, I guess those of us with business interests linked to European legislation had best look for an alternative job. As things stand, I think my company will have to fold in the next 18 months; who in China or India will want my services?

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