"The UK economy unexpectedly contracted by 0.4% between July and September, according to official figures, meaning the country is still in recession.The danger lies as much is the cure as in the disease:
It is the first time UK gross domestic product (GDP) has contracted for six consecutive quarters, since quarterly figures were first recorded in 1955."
"The worse-than-expected GDP figures are likely to make the Bank of England consider extending its policy of quantitative easing.Quantitative easing is the neologism for inflation – it basically means that the Bank of England prints more money in an attempt to stimulate economic activity. But more pounds chasing the same amount of production (or less!) simply means that prices will go up. But the products and services that these extra pounds are chasing are neither better nor more abundant than before – so the real value of those extra pounds will reduce. Already, the news has sent sterling sharply lower, with the euro gaining more than a penny to 91.5p this morning.
Quantitative easing is the central bank's policy of printing money and using it to buy bonds from banks and other companies to help stimulate the economy."
What it means, quite simply, is that the pound in your pocket is now worth less, and the prices of everything that is imported will rise. True, the corollary is that things produced in the UK will become slightly cheaper elsewhere, which may increase demand. But in order for this to be sustained, the costs in the UK have to stay down. Which all means that wages will not be able to rise to compensate for those higher import prices. People in the UK are going to feel slightly worse off.
It s all good news for those southern shoppers who will now get more goods for their euros in Newry, Enniskillen and Derry. Good news too for the shop-owners who may profit from a slight increase in the numbers of southern shoppers.
But overall the weakness of the UK economy, and its sluggishness vis-à-vis the major EU economies, shows that the Northern Irish economy is probably hitched to the wrong neighbour.
And, of course, with the UK economy underperforming, and the Treasury haemorrhaging money at unsustainable rates, the outlook for Northern Ireland's public sector dependent economy is especially bad.
Budget cuts and a weakening currency … Northern Ireland is heading for lean times.