Friday, September 05, 2008

Ain't No Sunshine

Turns out one size doesn't fit all

So, back from the Neapolitan sunshine to rainswept Britannia. We wonder if the legionnaires making the same trip were issued with umbracula. Certainly their descendants are going to need them as the price of one-size Euro membership weighs ever more heavily.

GDP growth in the five years to 2007 averaged just 1.1% pa, and is now contracting at an annual rate of 1.1% (ignoring the black economy, which may well have been hit even harder). Unemployment is taking off (up by 0.5% yoy), and all the talk is of huge job cuts to come - eg at the finally busted Alitalia.

Tyler remembers discussing Euro membership with some Italian bankers in the late 9os. They were hot for it - it would bolt Italy into a sunny world of permanently low inflation and fiscal discipline. Wouldn't it? Tyler found their enthusiasm alarming, fearing our new starry-eyed europhile rulers would never withstand such peer pressure.

Yup, wonder how those bankers are feeling now.

So through all the rain, collapsing house prices, and imploding car sales, let us give thanks to Jupiter we never joined. Nobody would start from here, and nobody likes to watch sterling plummet - especially when it comes to paying Italian hotel bills. But far better that, than being locked into the one-size Euro.

Weaker sterling should mean adjustment to our new straightened circumstances will not fall entirely on jobs and growth. And as long as the Bank continues to hold its firm line on interest rates, the overall impact on inflation should be containable.

We owe a huge debt to the man who saved us from the Euro. He must have been some kind of genius.

PS Higher inflation hits us all (see this jolly BBC summary), but fortunately for the Tyler budget, Mrs T has now implemented an emergency post-holiday dietary regime. Bacon up 75%? Doesn't matter - it's off the menu anyway. And the price of lettuce is unchanged since last year's emergency.

PPS WTF do we have to put up with the state broadcaster still giving airtime to Ali Campbell?Last night he was on for a cosy chat with fellow traveller Kirsty, and yes, we do understand nobody else we've ever heard of would come on to defend Labour, but Ali! Surely, we've suffered enough. And WTFFF are we paying him to present a BBC R4 prog on Jacques Brel?

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