#faisal islam

[indizombie]

Announcing the largest rate rise in more than a quarter of a century in an attempt to temper even higher peaks in inflation of an incredible 13% is what the Bank of England actually did today. But it is its prediction of a recession as long as the great financial crisis and as deep as that seen in the early 1990s that is the big shock here. This is a proper full fat recession at the same time as the inflation rate is forecast to hit a 42-year high. It is a textbook example of the combination of a stagnating economy and high inflation - stagflation.

Faisal Islam, economics editor, BBC

[indizombie]

Even before a fire at a key US export terminal, in theory 155 billion cubic metres of Russian gas exported to Europe by pipeline needs to be found from the current 500 billion cubic metres market for shipped LNG. Producers need to pump much more gas to meet this demand, but, for example the Qataris are finding it easy to sell this on long-term contracts lasting longer than a decade. Germany wants a shorter contract to reflect its efforts to phase out fossil fuels. In any event the transfer of German energy demand into this market will push up prices for the whole world. In the short term, however, the challenge will be to maintain supply and demand in the German energy system. And while Europe's industrial powerhouse scrambles to expand its gas import options, it might need to prepare for "demand management", using less energy in its factories and households, and that risks recession across Europe.

Faisal Islam, BBC

[indizombie]

Holyrood and Stormont rejected the Brexit trade deal. The UK has replaced a single market of 500 million Europeans free of non-tariff barriers with a single market smaller than the size of the UK. There is a trade border in the Irish Sea. Northern Ireland is mostly left in the EU single market. There are non-tariff barriers between Great Britain and Northern Ireland as a result of this deal... The Prime Minister has succeeded in taking the UK out of the Single Market created by his heroes. The UK now stands outside a system that it helped invent. For now its new single market is not the size of the country. The test of all of this, is to make the UK's new single market the size of the globe.

Faisal Islam, ‘Adieu to the single market created by the UK’, BBC

[indizombie]

Some Brexiteers had hoped that the edifice would collapse once the UK left. But it has proven more robust than that. Indeed, Brexit has proven a catalyst of the EU to sign trade and investment deals far more quickly, including even with China. So now the UK finds itself outside of the machine it created as its strategic competitor. The trade negotiation wasn't primarily about trade. Great Britain has declared as much regulatory independence as is compatible with a zero-tariff trade deal. The EU retains levers and switches to turn off some of these tariff advantages should the UK use the deal to turn into an offshore tariff free assembly hub for US and Asian manufacturing to be traded into the single market.

Faisal Islam, ‘Adieu to the single market created by the UK’, BBC

[tweetingukpolitics]

[indizombie]

Germany's industrial might has been significantly aided by its access to cheap Russian energy. Now those taps are being closed. At the top of the German government they say they have a phased plan to deal with all dependencies on Russia for energy. It has been easy with coal, as they can simply buy it in shipped form from the likes of South Africa and Colombia. Oil too is mainly shipped on tankers, bar one refinery connected to a pipeline from Russia. But gas needs a significant investment in alternative infrastructure, basically the LNG terminals that enable the purchase of shipped gas from around the world. This normally takes years, but Germany is exploring the idea of floating terminals that some claim could be ready by the end of the year. Further permanent terminals will take two years or so, part of the German effort to reduce dependence on Russian gas from 55% to 10%.

Faisal Islam, BBC

[indizombie]

The deployment of massive scientific networks within the National Health service, used for rapid clinical testing, could become the envy of the world. Brexit Britain is likely to become a laboratory for the global economy. Some tech companies are already porting their UK customers to be served under US data privacy laws rather than more restrictive EU ones. But the government will also have to be very active and judicious. There are a number of structural economic problems, from poor training, declining productivity and low investment that were not caused by EU membership which, in terms of non-tariff barriers, are made immediately worse by this type of Brexit, for which the UK has no option but to deal with.

Faisal Islam, ‘Adieu to the single market created by the UK’, BBC

[indizombie]

Within the EU, the UK even became the financial centre for a new currency, the euro, which it did not participate in. The single market itself, with regulations set and enforced in Brussels, became a player on the world stage. And yet there was a balancing act. The UK could influence the direction of one of the biggest tankers in the sea but was restricted in acting more nimbly in new industries. In some sectors, the UK's trade dealings with the US or Asia were more important than with Europe. And so this tension led to breaking point. And for the Conservative Party in particular the single market's institutions it created and championed, became something akin to Frankenstein's monster.

Faisal Islam, ‘Adieu to the single market created by the UK’, BBC