No it will just bring inflation. Higher wages from labour shortage = inflation = lower living standards.

Especially when there has been a sudden exodus and you then stop those people coming back. I’d have thought quite a few might want to come back now the £ is 8% higher against the euro, and the UK looks like it may be post pandemic.

Inflation currently looks like either (a) It is already a huge problem with huge pent up demand vs capacity cuts to below pandemic levels, or (b) ‘It is just a temporary blip’ - in which case we are in for large price drops within 6 months - which frankly seems unlikely.

If you take shipping costs, even if/when all the containers are back in the right place there will be a capacity shortfall, and you can’t build ships quickly.

Lockdown has hugely destabilised the economy. Materials and commodities prices hugely inflated - and I think once suppliers have the taste for hugely hiked prices I cannot see them lowering them again. The only pressure for prices falling again is a drop in demand plus competition.

Lockdown and money printing looks to be sending us back to boom & bust economics and all the damage that does.

High wages have not caused inflation in places like Norway and Sweden.

Low migration leading to lower unemployment reduces the government benefit bill, reducing deficit and in turn taxation. That leads to lower unemployment as business thrives. It's a virtuous circle.

No country can prosper with 5-10% unemployment, it's a drag on the economy.

The exodus of mostly low wage workers last year has lead to the unexpectedly lower unemployment figures than predicted that we have now. Thus this month borrowing is less than was predicted. All this puts the UK in a way better position than was thought. And the root of that is people leaving. That may conflict with some core beliefs, the "migration benefits the economy" mantra, but the numbers are there to see.

My local had a couple of EU bar staff back in the start of 2020. Now it has reopened with two British staff, the two predecessors having returned home. Their wages will recycle into the UK economy, rather than be partially repatriated abroad as an invisible import.

All very politically volatile to point out - but hey this is the situation and the results will become visible over the next few years.


I may even change by stance on not investing in the UK....

Greater chance of bojo leaving Carrie and marrying Dominic Cummings than any rate rise this year (and probably next too).

The Bank Rate paths Iam showing in Chart 17are consistent with the MPC’s guidance on monetary policy, but the guidance encompasses a wide range of other paths as well. I want to be very clear that these are my own personal views, and do not represent the view of the MPC.

My central scenario is that the economy evolves similarly to the MPC’s central projection in May, but with somewhat more slack than in the central projection. Relative to the MPC’s central projection, I worry that the transition out of furlough does involve a modest rise in the unemployment rate, while the economy’s supply potential is somewhat less adversely affected, so that there is still some excess supply around the turn of the year. In that scenario, the first rise in Bank Rate is likely to become appropriate only well into next year, with some modest further tightening thereafter.

On the upside, should the transition out of furlough happen more smoothly, with the unemployment rate at or a little below current levels by the end of the year, with associated signs of upward inflation and wage pressure beyond the temporary and base effects, then a somewhat earlier rise in Bank Rate would be appropriate. It would probably take until the first quarter of next year to have a clear view of the post-furlough unemployment and wage dynamics, so a rise in Bank Rate could be appropriate soon after, along a slightly steeper path than in my central case.

On the downside, the economy might not recover as quickly, perhaps as lingering concerns about “variants of concern” continue to weigh on demand, which in turn results in more adverse unemployment dynamics as fewer furloughed workers are hired back straight away, with weaker underlying wage pressure. In that case, it is still possible that monetary policy might be required to simulate the economy a little further to help eliminate slack and ensure inflation, after its temporary rise later this year, does not subsequently fall back below its 2% target persistently.

On the immigration thing...

I note the Home Office has released figures showing 34,300 applications for BNO visas from Hong Kongers in the first couple of months after the scheme opened: https://www.theguardian....hong-kong-in-two-months

That rate, if sustained, would indeed give the 1 million over 5 years originally given as an upper estimate by the Home Office - https://www.theguardian....years-official-estimate . The scheme has no quota limits.

(I've also seen numbers like 2.9million eligible, with another 2.3million dependents.)

Plus ça change?