Liz Truss cost of living crisis

‘Vastly overblown’: Brexit doom-mongering blown away – UK in better economic shape than EU

At the start of September, the Pound dropped 4.5 percent against the dollar, with analysts tipping the UK currency to “plumb new depths”. The Express: ‘Vastly overblown’: Brexit doom-mongering blown away – UK in better economic shape than EU

FULL STORY – The British pound lost 4.5 percent of its value versus the US dollar at the beginning of September, with experts predicting that it would “plumb new depths.”

The UK is doing better than the EU in many sectors, thus concerns about the UK economy are “vastly overblown.” Although Liz Truss’ government “has no margin for economic error,” expert Ambrose Evans-Pritchard stated that “it is untrue that the UK faces urgent debt constraints.”

According to Mr Evans-Pritchard, the UK “has the second lowest ratio of public debt to GDP in the G7 at 88 percent (IMF data), lower than Canada (102 percent), France (113 percent), the US (126 percent), Italy (151 percent), and Japan (262 percent)”.

He stated: “It has the safety buffer of a longer debt maturity. It is also untrue this Government is pursuing a uniquely irresponsible fiscal policy.”

“Until two weeks ago, the UK was the only G7 country pushing through rapid retrenchment so early after the pandemic, and the only raising taxes into a synchronised global downturn.”

“Furthermore, the Chancellor has picked the right targets by cutting National Insurance and by cancelling a corporation tax rise that would have left us with one of the highest levels among OECD states.”

Regarding the gilts market, Mr Evans-Pritchard wrote for the Telegraph that the “economic scare stories doing the rounds are greatly overblown.”

Any bond with an extremely low default risk and a similarly low rate of return is referred to informally as a “gilt.” He said: “There is no run on the UK gilts market. The ten-year yield is 3.31 percent in the UK, 3.18 percent in Canada, and 3.58 percent in the US.”

“Borrowing costs are lower in Europe – except Italy (4.21 percent) – but that is because core inflation is lower. The discrepancy has nothing to do with creditworthiness.”

The expert went onto claim “there is no rupture of the pound either”, continuing to say: “Sterling has had a rough few weeks but the Bank of England’s trade-weighted index is still higher than it was after the referendum.”

“The salient story in the global exchange markets is the rise and rise of the over-mighty dollar. The UK faces difficult times but it is not an economic crisis and it is not in worse shape than Europe.”

“Nor does it have higher inflation, contrary to what we are led to believe. The August tally was 9.9 percent in the UK and 10.1 percent in the EU.”

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