Typically, when it comes to July and August, summer vacations are the main focus for many people as they disappear from their normal routines and try to “switch off”.
So it has been for as long as we can remember, certainly in Europe.
This year is no different, or perhaps worse as headlines are filled with doom and gloom and impending catastrophes that will push us all into poverty along with lack of food and energy. Influencers and commentators are desperately seeking pieces of information, usually overstated and possibly inaccurate, to write about and to warn us of the disasters facing us in the coming months and years.
The COVID-19 pandemic started it all with the logistics and transportation snafus, followed by the war in Ukraine which has exacerbated shortages and caused inflation. In reality, can we really blame all the problems on these two events? Yes, certainly in Germany where the polices of the Merkel Government made the country energy dependent on Russian gas as nuclear power stations were being de-commissioned. The UK was hardly dependent on Russian gas and appears to have overcome shortage of supply, yet we hear of policies to reduce peak consumption in order to avoid electricity blackouts. Now that should be classified as a feature of the silly season when there are no political leaders to interview.
What we are seeing, in full reality, are price hikes based on expected shortages which have created a serious inflationary issue as energy traders, transportation providers and producers have taken advantage of expectations and seriously raised prices resulting in some eyewatering profits.
The expectation of inflation is reflected by the workforces in Europe that are going on strike or threatening to, in order to main parity with the rising cost of living. Port congestion in Europe is being driven by labour unrest and staff shortages in Germany, the Netherlands, France and the UK.
The bad news is that the expectation of inflation is becoming self-fulfilling and also aided by increasing interest rates that are slowing consumer demand which will, in turn, lead to a downturn in trade and economic growth. The good news, not much to be seen at the moment!
