Boris Johnson (Photo by Getty Images Europe, Thierry Chesnot, Stringer)
“After more than 50 members of his party have resigned, Boris Johnson has resigned as Prime Minister of the United Kingdom. For the Conservative Party, which may only happen in October.
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“Either way, Britain is embarking on a new path when decision-makers have quite a few burning issues on the agenda and especially the Brexit and rising inflation process. The fact that Johnson tried to whitewash the story.
“It’s certainly a very juicy story for the media but in the end it’s just the straw that broke the camel’s back. Per second in thickets.
“If the worldwide labor shortage is reflected in rising wages and inflation, then in the UK it is a deeper problem as the Brexit has created a huge shortage of workers who previously came from the EU,” says Uri Greenfeld, the chief strategist at Psagot Investment House.
“By the way, Northern Ireland, where Brexit is hardly implemented because of the sensitivity to Ireland and the Good Friday agreements, has enjoyed a clear advantage since Brexit, which has annoyed quite a few Brexit supporters in Johnson’s party. Even if the Conservatives find a replacement and even if Britain goes to the polls.
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“Either way, the Brexit process is likely to moderate following the political changes over the next year. Even if it takes longer, at the end of the day Britain will reach, like other countries like Switzerland or Norway, agreements with the EU that will allow it to remain out of the EU. With rights and obligations as of any member of the union. ” He adds.
As for the U.S. economy, Greenfeld says the June employment report was better than expected with an addition of 372,000 new employees to the U.S. economy, which eased some fears of a recession, at least for the coming month. It is a disappointment to him, since the employment data for July strengthen the estimates that the forthcoming interest rate hike will again be 75 b.kr.
“The unemployment rate remains at 3.6% but the labor force participation rate fell by 0.1% to 62.2%, which shows that at least during June there was no return of workers to the labor market. A similar figure could be seen as early as Wednesday when the JOLTS report Of May in which it became clear that despite a certain decline in the number of job openings, the US labor market still produces almost 2 job openings for every person looking for work.
“Accordingly, wage pressures are still strong and have risen 5.1% in the 12 months to June. For employees (open jobs versus job seekers) is reduced, the Fed will not stop raising interest rates.
“As we noted last week, we believe this gap will narrow towards the end of the year from both directions – on the one hand the recession, the declines in the financial markets and the reduction in savings will bring many workers back into the labor market. On the other hand, the recession “Signs of a slowdown in the labor market with the moderation of inflation because of supply factors will cause the Fed to recalculate a trajectory, probably as early as 2023,” Greenfeld concludes.
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