18 October 2017

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Retired Member

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Politics in Finance

26 October 2009  |  2329 views  |  0

Now I don't normally raise my voice on political issues but when they interfere with markets it is difficult to keep one's peace.

Perhaps there will be a strong backlash but I feel that no matter what side of the political divide you sit, you have to admit that we currently have a weak government in the UK. The economic consequences are very telling. On Friday, amidst a fury of early morning comment, our dear UK woefully missed the mark of coming out of recession. Sadly however so many other countries have already done so, including many of our European neighbours. This is the result of poor policy and coupled with a weak government it means that sterling has now weakened dramatically since the begining of this year.

A weak economy will lead to lower interest rates (or as they can't really get to any lower, then the same ones for a long time). This means that sterling is unattractive compared to other currencies.

The effects are a much higher cost of imports, along with higher unemployment and somewhat of a brain drain (yes top people do move to follow the economy).

In contrast South Korea is at a 7 year high for its growth, Brazil and Columbia are storming ahead and continental Europe has begun to pick up. The medium term effects for the UK economy may well be cumulative if we don't turn around soon.

Whatever your politics, a weak government helps no one. I can only hope that the situation is improved soon

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