Problems are mounting in the UK at the start of the Brexit negotiations, which are supposed to begin next Monday, but could be postponed because May needs time to make the pact with the DUP that supports it. This Tuesday morning, the inflation figure in May was known, which shows that Brexit’s nationalist adventure is already punishing the pocket of British citizens. In May last year, the month before the referendum, inflation was only 0.3%. Today it is at 2.9% (in April it had been 2.7%, which shows that the rise is constant).
It’s the worst in four years.
The British are losing purchasing power because wages do not grow at the pace of prices. Tomorrow will know the data of wages and it is believed that the increase will be 2%, almost one point less than inflation. The reason for the rise in prices is the weakness of the pound, which has devalued around 16% since the referendum. After May’s failed attempt to achieve the absolute majority, the currency has suffered a new setback.
To understand the magnitude of the regression just remember that two summers ago the sterling was at 1.44 euros, while today has fallen to 1.13. The bargain holidays to Spain have been complicated for the British. The basic food products are rising, in a country that imports the bulk of them (the basic French red wine is in record prices). The National Statistical Institute attributes the bad data of May, above all to the increase in tourist packages and video games and electronic articles. The Bank of England’s target for May was 2%, almost one point less than the figure that has been recorded. By the end of this year it foresaw a 2.8%, which has already surpassed.
The bad inflation data is linked to other disturbing indicators, such as the housing price stagnation and doubts about the future access of British industries to the EU’s single market, its main customer. It is also doubtful whether the main British industry, the City of London, will manage to maintain its European passport.
When Theresa May convened early elections in the middle of last April, it was considered that she did so in the face of the extreme weakness that the polls blamed – erringly – on Labor leader Jeremy Corbyn. But some analysts also mentioned that the government could have private data that anticipated an imminent deterioration of the economy. The elections would then have been an attempt to reinforce themselves before the crisis affected the electoral expectations of the Tories, the party that in fact made Brexit possible.