Dumb risk premium, Brexit and lessons – The New Indian Express

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“Stupid risk premium” is a term of our time. The pithy phraseology, a contribution from British analyst Dario Perkins by TS Lombard to the expert, eloquently characterizes the economic costs of political blunders. Its use, however, should not be limited to explaining the state of the UK bond market. It qualifies to reside in a world facing rapid disruption. The phrase ‘dumb risk premium’ defines why Britain ended up where it is and the price paid for Brexit.

Brexit has deepened fragility and widened rifts. The authors of Britannia unleashed in fact, compelled Britain. The headlines in Britain are about the leadership race – between Rishi Sunak, who is waving the ‘I told you so’ card, and the return of Boris Johnson, heralded by the hashtag #BorisForPM. The silence about the cause of economic turbulence is as deafening as the decibels about the consequences.

The availability and affordability of money could deteriorate as the US Federal Reserve, faced with high inflation, raises rates further and the pound approaches parity with the dollar. On Friday, the rating agency Moody’s has changed the outlook on the UK from stable to negative, citing a host of reasons including weaker growth, political volatility and policy unpredictability. The cause of the catastrophic circumstance in the United Kingdom is essentially the outcome of Brexit.

The worst fears of 2016 haunt the British economy. Earlier this year, the Office of Budget Responsibility Observed that the new UK-EU trade relationship “will reduce long-term productivity by 4% compared to staying in the EU” and that “exports and imports will be around 15% lower “. In effect, the OBR reveals that compared to other G7 economies, the UK “has missed out on much of the recovery in global trade”. Britain now lags India in economic size, trails GDP growth among its G7 peers and is indeed set to grow in 2023 by just 0.3% by then IMF and 0.0 by the OECD.

Amid the debate over the blue walls and red walls of British party politics, the cost of walling the economy in has received little attention. Piety of intent in politics has limited utility. Arguably, the absence of red tape and “policy sovereignty” was a selling point for Brexit, but in reality the bureaucracy of one EU is now being replaced by that of 27 countries. The flow of capital — dependent on the sustainability of companies — is today threatened by weak growth. Economic growth depends on productivity factors — primarily the affordability of capital and access to labor. Brexit and proponents of the Rwandan model have blocked the inflow of skills and labor essential for growth.

Britain’s spectacle of uncertainty holds valuable lessons for the developed world on how it approaches the critical issue of labor mobility and migration. For more than two decades, attempts by India and other developing countries to clean up the quagmire of mobility and migration in the WTO have been thwarted by developed countries.

Negotiations on free trade agreements come up against a wall of resistance when it comes to mobility and migration. The sight of delays in issuing visas (see https://visalimbo.netlify.app/ for a snapshot) carries the scent of political momentum. It is true that the pandemic has affected operations but the persistence of delays is inexplicable. Can developed countries do the best? Could the visa issue become a new non-tariff barrier? No wonder countries report it to the WTO.

The fact is, the developed world is on the wrong side of demographic change – the working-age population in the developed world will shrink by almost a billion, while the developing world will grow by more than a billion. The dependency ratio, that is the proportion of people over 65 dependent on those of working age, in the G7 countries is on the rise — it is 75% in Japan, 67% in Italy, 63% in Germany, 55% in France, 53% in the United Kingdom and almost 50% in the United States.

If we add to this the fact that the service sector represents more than two thirds of the GDP of these countries, this translates into a need for human talent. Investment in technology could perhaps reduce the human interface in some sectors, but the deficit will manifest itself in basic governance – whether it is health care, education or even health services. essential security.

The shortfall in the working-age population will impact governance and growth – fewer wage earners effectively means less consumption and lower growth. This will show up on the economy’s balance sheets, affect social benefits and the maintenance of pensions, and discourage debt sustainability.

There was a time when wealthy monarchies colonized countries for resources. In the post-war period, countries colonized markets. The global economy has since evolved into a highly complex matrix of interdependence. Recent events threaten the global economic architecture, and the developed world will need to do more than preach about the need to preserve a rules-based global order. Maintaining global order requires an equitable partnership in building a vision of shared prosperity.

“Stupid risk premium” is a term of our time. The pithy phraseology, a contribution from British analyst Dario Perkins by TS Lombard to the expert, eloquently characterizes the economic costs of political blunders. Its use, however, should not be limited to explaining the state of the UK bond market. It qualifies to reside in a world facing rapid disruption. The phrase ‘dumb risk premium’ defines why Britain ended up where it is and the price paid for Brexit. Brexit has deepened fragility and widened rifts. The writers of Britannia Unchained have indeed coerced Britain. The headlines in Britain are about the leadership race – between Rishi Sunak, who is waving the “I told you so” card, and the return of Boris Johnson, heralded by the hashtag #BorisForPM. The silence about the cause of economic turbulence is as deafening as the decibels about the consequences. The availability and affordability of money could deteriorate as the US Federal Reserve, faced with high inflation, raises rates further and the pound approaches parity with the dollar. On Friday, rating agency Moody’s changed the UK’s outlook from stable to negative, citing a host of reasons including weaker growth, political volatility and political unpredictability. The cause of the catastrophic circumstance in the United Kingdom is essentially the outcome of Brexit. The worst fears of 2016 haunt the British economy. Earlier this year, the Office for Budget Responsibility observed that the new UK-EU trading relationship “will reduce long-term productivity by 4% compared to staying in the EU” and that “exports and imports will be around 15 per cent lower.” Indeed, the OBR reveals that compared to other G7 economies, the UK “has missed out on much of the recovery in global trade.” Britain now trails India in economic size, trails GDP growth among its G7 peers and is indeed set to grow in 2023 at just 0.3% per year. the IMF and 0.0 by the OECD Amid the debate over the blue walls and red walls of British party politics, the cost of walling the economy in has received little attention. intention in politics is of limited use. It can be said that the absence of red tape and the “sovereignty of politics” were a selling point for Brexit, but in reality the bureaucracy of one EU is now replaced by that of 27 countries. The flow of capital — dependent on the sustainability of companies — is today threatened by weak growth. Economic growth depends on productivity factors — primarily the affordability of capital and access to labor. Brexit and proponents of the Rwandan model have blocked the inflow of skills and labor essential for growth. Britain’s spectacle of uncertainty holds valuable lessons for the developed world on how it approaches the crucial issue of labor mobility and migration. For more than two decades, attempts by India and other developing countries to clean up the quagmire of mobility and migration in the WTO have been thwarted by developed countries. Negotiations on free trade agreements come up against a wall of resistance when it comes to mobility and migration. The spectacle of visa delays (see https://visalimbo.netlify.app/ for a snapshot) carries the scent of political momentum. It is true that the pandemic has affected operations but the persistence of delays is inexplicable. Can developed countries do the best? Could the visa issue become a new non-tariff barrier? No wonder countries report it to the WTO. The fact is, the developed world is on the wrong side of demographic change – the working-age population in the developed world will shrink by almost a billion, while the developing world will grow by more than a billion. The dependency ratio, that is the proportion of people over 65 dependent on those of working age, in the G7 countries is on the rise — it is 75% in Japan, 67% in Italy, 63% in Germany, 55% in France, 53% in the United Kingdom and nearly 50% in the United States. If we add to this the fact that the service sector represents more than two thirds of the GDP of these countries, this translates into a need for human talent. Investment in technology could perhaps reduce the human interface in some sectors, but the deficit will manifest itself in basic governance – whether it is health care, education or even health services. essential security. The shortfall in the working-age population will impact governance and growth – fewer wage earners effectively means less consumption and lower growth. This will show up on the economy’s balance sheets, affect social benefits and the maintenance of pensions, and discourage debt sustainability. There was a time when wealthy monarchies colonized countries for resources. In the post-war period, countries colonized markets. The global economy has since evolved into a highly complex matrix of interdependence. Recent events threaten the global economic architecture, and the developed world will need to do more than preach about the need to preserve a rules-based global order. Maintaining global order requires an equitable partnership in building a vision of shared prosperity.

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