If we crash out of the EU, then sterling will collapse as global investors beat a retreat, pull their money out of the UK and ditch their pounds in the process. If the pound becomes much weaker, then things we import cost us more. Fridges, cars, raw materials etc. And so inflation starts to rocket upwards as prices increase. As inflation rises, the Bank of England uses interest rates to try and keep this under control, effectively dishing out an economic chill pill and dampening our ability to borrow and spend.
And there you have it. As interest rates head north, mortgage rates also jump upwards and BOOM – the demand for property tails off.
Carney is not the only one anticipating the sky falling in.
The John Lewis Partnership may be never knowingly undersold but they’re also knowingly underperforming, reporting a fall of 99% in profits in the first 6 months of this year. The total profits including John Lewis and Waitrose (its saving grace) were a paltry £1.2 million. Despite some Brexit Blaming, I suspect it’s more the usual story about Amazon and ASOS, as the store tries to revamp its shopping experience and compete with the online onslaught.
I leave the final word this week to a partner in an insolvency practice, who is presumably one of the few people looking forward to the potential carn-ey-age ahead. Julie Palmer made me spit out my cornflakes laughing this morning as she was quoted in The Times, commenting on John Lewis.
"This brand was hailed as the model to which all should follow as a commercial and customer success — make no mistake, for the high street this is as significant as the fall of the Roman empire. And much like the fall of Rome, it’s not just the empire that suffers, the infrastructure that supplies it will too. The UK industry must steel itself for dark times to rise again."
Blimey Joe, pass the popcorn! Never have corporate results felt so damn exciting!
I think everyone needs to have a nice cup of tea and calm down.
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