Recession incoming?

 It is amazing really how long the Government and the media take to cotton on to real world events. 

As readers here will know, as soon as the Ukraine war broke out and sanctions were applied to Russia, an economic disaster was set in train. 

There was no hope of controlling the oil price, a weak pound and strong dollar has accelerated the damage. Then we have China with a frankly insane covid-zero policy that has hugely derailed their economy and will continue to do so. 

The effects of the above are galloping inflation, a huge excess of supply over demand across the West and energy input costs up nearly 300%.

With all of this a recession is to be expected, indeed the Government must want the demand destruction of a recession to help reduce inflation. 

The idea that a -0.3% read, hugely impacted by the reduction of spend on test and trace, is only a passing feature is for the birds. 

More likely this summer is petrol and diesel at well over £2 per litre and a further big drop in the stock markets. Until the global supply chain is sorted out, there will be no let up to the economic stress. 

As for our Government, they continue to profiteer from energy prices via VAT. They are not alone, much of the inflation now is profiteering with suppliers sensing they can push up prices if they want too. 

The inflation genie will be very difficult to control now. However, time also to keep an eye on sovereign bond yields across the EU. As we know from the 2011 Euro crisis, Italy and other economies cannot withstand inflation pressures in the Eurozone when devaluation is not an option. Germany may find itself bailing out the Euro as well as Russia.