Britain’s economic problems can, of course, be laid at the door of Brexit. We know this because it was asserted on a BBC podcast which went viral over the weekend – and no one would question the BBC’s objectivity. But maybe there ought just to be a scintilla of doubt in the heads of the staunchest remainers given this morning’s news that eurozone inflation has reached 10.7 per cent – even higher than Britain’s latest CPI figure of 10.1 per cent. Markets had been expecting Eurozone inflation to stay a little below the 10 per cent mark.
Far from Britain parting off from the rest of Europe and entering a death spiral, it is remarkable how Britain and the EU are converging in their respective economic crises. As for inflation, so for economic growth. The S&P’s Purchasing Managers’ Index (PMI) – a concept which is calculated and published by several organisations – for the eurozone in October stood at 47.1 (anything below 50 denotes a shrinking economy). This is virtually indistinguishable from the figure of 47.2 for the UK, which I reported last week. Across the eurozone, economic growth has come out a little stronger in Germany and a little weaker in France.
And for bond yields? Pretty much the same story. Bond yields in the eurozone have been surging all year, with the yields on ten-year bonds touching 3 per cent last week, half a percentage point below those in Britain. As in Britain, so in the eurozone: over-borrowed governments are being punished by investors for their failure to balance the books. And of course, soaring inflation has a lot to do with the energy crisis which is being felt across the continent.