Europe

According to experts, the UK economy is “one of the most vulnerable countries” due to inflation and mortgage trends.

Moscow (Sputnik)-Because the UK mortgage market is “very short-term,” the government’s move to raise interest rates does not curb inflation, but damages households, so the UK economy is now “in the world.” One of the most vulnerable countries. ” Investment strategist Mike Harris told CNBC broadcasters in an interview released Monday.

“I would say Britain is currently one of the most vulnerable countries in the world because of its dynamics and the fact that the central bank governor did nothing about it, they may still take some time. Maybe, “Harris said.

In addition, experts say that rising interest rates, which usually help control supply and demand in the market, are meaningless in terms of keeping prices rising, as inflation in the UK is primarily “imported” from abroad. Pointed out.

“Here we are not really dealing with the pure situation that is trying to slow the economy, but ultimately we are trying to rebalance expectations. The UK is a country that is importing inflation. … Therefore, we are in a position to be effectively freed simply by focusing on ineffective supply and demand. “

UK policymakers should have helped households by extending their mortgage terms, rather than curbing consumer demand, thereby reducing their debt burden.

“We are with the Bank of England [bank’s former governor] Mark Carney didn’t do what he was supposed to do. “

According to Harris, many in the UK prefer short-term mortgages to long-term obligations. As a result, it is vulnerable to the negative effects of rising interest rates that the UK government has adopted to deal with rising inflation, especially rising household spending on mortgages that are rising at the same time as interest rates.

The Bank of England raised interest rates by a quarter percentage point on Thursday and raised benchmark interest rates to 1%, the highest since 2009. The Bank of England has raised interest rates four times in a row. Predict that inflation The UK is expected to grow by up to 10% this year as food and energy prices are skyrocketing due to the crisis in Ukraine.



https://sputniknews.com/20220509/uk-economy-one-of-the-most-vulnerable-due-to-inflation-mortgage-tendencies-expert-says-1095360973.html According to experts, the UK economy is “one of the most vulnerable countries” due to inflation and mortgage trends.

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