A higher inflation rate indicates that people are spending more money. If people are more willing to spend money, then the prices of products will go up. And with them, so will profits. If more profits are being made, then wages might rise, or more jobs might be made if the right investments are made. Inflation is not something that can be directly controlled or dictated but is rather the result of the market responding to growth or decline.

The rising rate of inflation is, essentially, down to more people being able to spend again. This is a credit to the strong vaccination effort in the United Kingdom that has seen over thirty-two million adults fully vaccinated – almost half the UK adult population.

When just six months ago in December 2020 there was the beginning of a frightening second wave of Covid, and with vaccinations only just beginning, there has been a mighty turnaround that is now bearing results economically as well as medically. The economic recovery seems to have taken a “V” shape, with a sharp rise after a slump, rather than a more gradual “U” shape or a rocky “W” shaped recovery.

Another reason for a relatively high amount of spending right now could be down to the low interest rates, which are only at 0.1% right now. What this does is disincentives saving money, because you won’t be accruing much interest on it, and you might as well spend it.

However, with inflation rising, so too might interest. This would be done to keep inflation in check, by making saving money more appealing, it slows down people’s spending so inflation doesn’t rise too high and too quickly and things become too expensive.

However, the tricky downside to higher interest rates would be that debts become more expensive. While before you might’ve had to pay back 100% of a loan + 0.1%, you might have to soon pay back 100% + 2%, and that can add up.

Pandemic spending required a colossal amount of borrowing from the government, totalling £2.2tn, and the government will eventually have to pay that all back. That will be done over many years and will get more expensive as interest rates rise.

While the Bank of England cannot directly control inflation rates, it can control interest rates, because it is the one that dictates monetary policy. However, if interest rates are too low, inflation might become uncontrollable and things become too expensive for wages or real spending to match.

Likewise, if interest rates are too high, then people might stop spending money, and both private and public debts will become more expensive. This might lead to tax increases as governments try to find a way to pay back the loans that they took out to protect their people during the pandemic.

The Bank of England has said that while inflation is higher than they expected it to be, they do not believe it will stay high, and have another dip next year, as it did after the 2008 crash. Furthermore, it will continue with its policy of Quantitative Easing, an “electric money printing” tactic that encourages banks to lend to the private sector to boost spending.

To keep up with the latest commercial news, click on commercial to get your daily dose.

The post UK Inflation Rises As Covid Recovery Continues appeared first on Relawding.

There have been some suggestions that property purchases like this are not that impactful on the market as a whole. The Atlantic points out that investors own only about 300 thousand houses of the roughly 140 million in houses in America – with Black Rock only owning 80 thousand of that figure. But, that ignores the strategic nature of these increasing investment portfolios.

Investors are not buying just any kind of property, but rather ones with the greatest prospect for growth, to the detriment of younger people. They target houses in cities with typically younger, working-class or lower-middle-class people who might have a good wage. This has taken the shape of 22% of houses bought in both Atlanta and Charlotte, and 20% in Phoenix. In its most extreme, investment firms were responsible for 90% of all purchases in Atlanta between 2011 and 2012.

The same tactic has also been taking place in the UK, as Black Rock has invested £100 million in a retirement village, banking on the fact that the population in the UK (and elsewhere) is growing older and more people will need retirement homes, and for longer too. They have also targeted student accommodation, following the trend from America.

Some suggestions moving to a renting culture, rather than a home-owning one, might be a good thing for countries like America. It would offer people flexible city-living, where they would not be tied down to property that might be difficult to buy with rising house prices.

In a rational economic understanding, renting is the better short-term option because it is cheaper than buying a home with a mortgage. But often that relies on market competition pushing rent prices down, which doesn’t seem to be happening.

Because these investors are buying properties wholesale, they can afford to keep prices high and leave no option for renters – they don’t need to compete against themselves. Furthermore, with high rents, they encourage other independent landlords to match their prices, making the deal worse for people who need a home. Investment firms typically recoup the cost of the house in eight years of renting, and then it profits up.

For the high cost of rent, the conditions are poor too. There are reports of water leakages, black mould, and insect infestations that large investment companies refuse to properly address. They stack high fees and issues onto the renter who has no ownership of the issues they face, simply because there is often the little alternative. Renters also have typically fewer legal protections than homeowners.

Housing is not a luxury, it’s a need, and moving can be difficult, so bad landlords rely on their renters becoming frustrated and accepting the conditions as they are, rather than big businesses sorting anything out of their pocket.

In countries where there are simply too few houses being built, investment companies buying up renting opportunities is forcing house prices up – good if you own a house, but bad if you don’t. They then offer out those houses with high rent, but young people cannot afford to buy where they need to and are forced to rent instead.

The likes of Blackrock are happy to buy for more than the market rate because as a large company they can absorb the difference, and in less than ten years the renting opportunities will pay off the price of the houses anyway. Meanwhile, young people in cities are being squeezed more and more, fuelling generational inequality.

To keep up with the latest commercial news, click on commercial to get your daily dose.

The post Investment Banks like Blackrock Rising the Property Ladder appeared first on Relawding.

Unfortunately for those who are hoping for peace between Israel and Palestine, Naftali Bennett isn’t that man. This has not been a move by Israeli politicians to find a candidate who will deliver them a peaceful agreement with Palestinians and bow to international pressure from the likes of President Biden.

Rather, it might be more of the opposite. Naftali Bennett has been described as a “hardliner” and “hyper-nationalist”, who will no doubt be intent on driving forward with colonisation efforts.

Naftali Bennett has made his name in Israeli politics with the backing of other hard-right supporters in his party Yamina, who expect him to continue with the annexation of parts of Jerusalem. He has previously said that he wants to expand Israeli settlements in Jerusalem by almost two thirds, forcing Palestinians into Areas A and B, which make up 38% of the area they are allowed to occupy.

Far-right plans which Bennett advocates sound as if it likens Palestinians to animals in a zoo – plain to see when Bennett likened an Israeli Arab to a primate, suggesting “when you were still swinging from trees, we had a Jewish state here”.

Israel has been trying to get rid of Netanyahu for some time. He has had corruption charges against him and there have been four snap elections since 2019, but the elder statesman has managed to stay in office until now, marking off his second spell as Prime Minister, which lasted twelve years. While he is a titan of Israeli politics, his successor was very much less so.

Bennett’s party only won a handful of seats in the Knesset (parliament), but with a hung result, he became a power broker. With the centrist Yesh Atid party, Bennett and other smaller parties joined a coalition to oust Netanyahu, managing a 60-59 majority in the Knesset. Bennett was offered a coalition with Netanyahu to keep him in power, but he declined the offer.

Bennett, the unlikely outsider, will run as Prime Minister for the first two years of the coalition’s term in office, before giving over power to Yesh Atid’s leader Yair Lapid for the last two years. There might be a bit of whiplash between Bennett’s term and Lapid, with some on the former’s side branding him a traitor for siding with centrists and leftists.

Indeed, one of the members of the new coalition is the United Arab List, the first Palestinian political group to ever be a part of an Israeli government. There are hopes that the coalition might temper any plans that Bennett has which are extreme, but he appears to be a man who does what he says he will do, and now he has been given the power to do so.

For many Palestinians, there may be no real change. This has been a coalition against Netanyahu, rather than one made to fix the divisions in Israel. There might be work towards internal reform and fixing the corruption that Netanyahu has been accused of, but no real prospects for peace.

On that front, Netanyahu could be persuaded to stop by US Presidents. It’ll be interesting to see how Bennett responds to opposition from their most important ally.

To keep up with the latest commercial news, click on commercial to get your daily dose.

The post Netanyahu out as Israel has a new Prime Minister, Naftali Bennett appeared first on Relawding.

The Northern Ireland Protocol

The rushed Brexit negotiations at the end of 2019 have meant that there is effectively a border down the Irish sea between Great Britain and Northern Ireland, something that Prime Minister Boris Johnson promised against.

It’s worth pointing out the difference between “Great Britain” and “the United Kingdom” here – the former is the island that England, Wales and Scotland are on; while the UK is the union including Great Britain and Northern Ireland. While there is a hard border within the United Kingdom between the two islands, it has not broken up the union, although it does sour the relationship.

The border down the Irish sea might be a contentious issue, but it is there to stop an even more damaging one, which would be to force an Irish border between the north and south, which would break the Good Friday Agreement and potentially bring back the Troubles after more than twenty years of peace.

The Northern Ireland Protocol, therefore, is the clause in the Brexit negotiations that ensures there will not be a hard border between Northern Ireland and the Republic of Ireland. However, trade was seamless when all parties were in the EU, which has changed post-Brexit as new customs requirements have meant more checks are needed from both sides.

These are carried out not on a north-south Irish border, but rather in ports between Great Britain and Northern Ireland, meaning that they effectively still operate inside the EU. However, that has forced a wedge between Westminster and Stormont, as Northern Ireland is understandably reliant on the rest of the United Kingdom for a substantial amount of trade – including food.

The Sausage Ban

Part of the European Union’s different customs standards is that they do not allow chilled meats to enter their market from outside of the EU – which now includes the UK. This means that Northern Ireland, acting as if it was in the EU, will not be able to stock British meats in its shops and stalls, such as sausages.

There has been a six month grace period provided for the UK and Northern Ireland to establish a new normal relationship and prepare for different trading possibilities, but it appears that Westminster has still left itself unprepared and caught out.

PM Johnson and Brexit Minister Lord Frost have asked for an extension to the grace period, and continue to look to stall the incoming post-Brexit measures that they passed through Parliament at the end of 2019. However, the EU has pushed back on these proposals, suggesting that an extended grace period was never in legislation and has not been properly discussed and agreed upon by both sides, and as such would break international law.

There looks to be a stalemate between the UK and the EU – and not for the first time in the post-Brexit relationship. Johnson’s government has declared that they are ready to ignore the incoming “sausage ban” if they do not get an extended grace period, as they continue to juggle Brexit legislation along with everything else.

The EU, on the other hand, have threatened tariffs against the UK which would amount to a “Sausage Trade War”, as they would view the UK as unlawfully breaking their treaty. That would involve more costs on trade between the UK and EU and an even chillier relationship.

The EU suggests that they are looking to enforce the transition period as it is to ensure stability and predictability for business in Northern Ireland – and if there was a trade war, it is unsure just where Northern Ireland would sit in it.

Unionist and Republican tensions increase over the uncertainty over Stormont’s place in the world, just as UK and EU tensions increase in the tug of war over Northern Ireland, with Belfast caught in the middle.

To keep up with the latest commercial news, click on commercial to get your daily dose.

The post Northern Ireland Protocol: What Happens to Chilled Meat After June? appeared first on Relawding.

With a reportedly less-than special successor in the Christian Democratic Union (CDU) party with Armin Laschet, and shifting political trends giving more prominence to Die Grünen (The Green party) and the far-right Alternative for Germany (AfD) party, there could be a shift in German, and European, politics for the next few years.

Merkel, the CDU and Laschet

Angela Merkel has been a dominant leader in German politics for the last sixteen years. The stability of her leadership, along with the conservative policies of the CDU, has allowed the country to sail through crises largely unscathed.

In her premiership, Merkel has taken Germany through the 2008 financial crisis, the 2015 migrant crisis when the country welcomed refugees instead of rejecting them, and the Covid-19 pandemic where Germany has done relatively well, compared to other large economies. While there are benefits to having an already large, rich country, strong leadership is an intangible quality that shouldn’t be taken for granted. Look at the likes of the UK, the US and Brazil at that time.

The shoes of the chancellorship, and leader of the CDU, are big ones to fill, and Armin Laschet has been chosen by the party to do it. He comes across as a safe pair of hands but appears to not have the force of personality of Merkel. He runs on the identity of a reliable everyman: the son of a miner who still lives where he was born, in the countryside near Aachen.

The CDU, under both Merkel and Laschet, adopts a pragmatic wait-and-see approach to its policies, preferring to stay flexible and free to change its mind. It is the only major party to have not released a manifesto for the upcoming elections, leaving some to ask how Laschet plans to cut carbon emissions by 80% before 2040.

Baerbock’s Greens

The CDU’s main opposition in the polls is the Green party, with Annalena Baerbock as their leader. Baerbock appeared to be initially popular in Germany, but the more that was learned about her and the Greens, the faster they fell in credibility.

Baerbock recently had to make an embarrassing u-turn regarding her online CV, after there were accusations that she played up her qualifications in international law at the London School of Economics. While it isn’t clear how founded these claims were, they caught the public eye, as public support for her fell twelve points in the wake of it.

While the Green party has shown an ambition to be taken seriously, they have also come off as radical next to the conservative CDU. The party has promised a tax hike on fuel in the country and suggested sending arms to Ukraine in the face of Russian oppression.

While the former policy is typically divisive but not uncommon for green-issue parties, the latter could put German-Russian relations into an uncomfortable position with an inexperienced leader at the helm. There are suggestions that Baerbock might’ve been overly ambitious in some of her rhetoric and policies, and any gain on Laschet early on has disappeared to the safe pair of hands that are the CDU.

Picture

German elections do not operate in the same first-past-the-post way that UK ones do, so there is a greater emphasis on coalition building in the Reichstag. If the CDU does become the dominant party, it is likely to be with a smaller seat-share than under Merkel, and they might have to make concessions to the likes of the Greens. Although other parties have pledged not to work with them, the likes of the AfD might still have a role to play in running politics in Germany post-Merkel.

To keep up with the latest commercial news, click on commercial to get your daily dose.

The post The Shape of the 2021 German Elections appeared first on Relawding.