Reykjavik On The Thames

Britain isn't quite Iceland yet but it's economy looks in more and more trouble by the day. There has been a lot of glib talk about how the collapse in sterling will help out the British economy. But that ignores our reliance on imports. I noticed today that both Ford and Carlsberg said they were planning to raise their prices to take account of the fall in the value of sterling. We'll see a lot more of that in the year ahead. The net result is that inflatin will remain stubbornly high even as we move into a full-blown recession. One result will be to lower consumer spending even further, hitting demand. Another is that the Bank of England will have to think twice about lowering interest rates any furher. In a worse case scenario, it might even have to raise them. If that happened, the economy really would be plunged into a full-scale depression.