prices up or down?

[Gill Smith]

repair now

or later, in the hope that prices drop because of deflationary budget cuts?

--

[OG]

I suspect the biggest issue is the way the Pound goes against the dollar.

[Andrew May]

Depends whether that is greater than the increase in VAT.

[Gill Smith]

and whether the damage from not fixing the roof offsets the deflationary price fall!

--

[Man at B&Q]

If it needs doing, just do it. There's always something around the corner and you will procrastinate forever, otherwise.

Somw you'll win, some you'll lose.

MBQ

[js.b1]

BCO do not like deflationary episodes... leaves a lot of dust to clean up :-)

Short Term we may well have deflation. Probably 6-8 months this year if it occurs, combined with a likely double dip in as much because the recovery was just deficit/debt/ restocking fuelled. I think Q1 growth will be bettery than January suggested re bad weather, BUT then Q2-Q3 growth will be less than one would project based on Q1 numbers. Enough to whipsaw the market a bit anyway - although limited by "somewhat low figures anyway". This is why the BoE "jawboning" risks to economic growth directly spooked currency & bond traders.

Mid Term we will have various indirect & direct tax rises.

Long Term we will have a stinker of inflation. Central Bankers know how to 1) create inflation and 2) fight inflation

- whereas deflation is the bogeyman they fear, debt remains the same but ability to pay down the debt diminishes making the debt ever more onerous.

Overall the real short term problem is we have a big deficit AND we do not have sufficient growth to cut the deficit by much. That is a serious problem, because 1995-1997-2008 was in fact a credit fuelled binge "if nothing else works, relax the credit rules to a posteri-credit-testing rather than apriori ". The UK can devalue since it has a floating currency unlike the Euro - but unlike the Euro it does not have the "under-duvet" ability to go to the Euro bailout fund (it has to go to the IMF).

We sadly need a serious rejigging of house prices (down), deficit (down), general bureacratic spending (down), taxes I'm afraid (up) and yet maintain positive GDP - it's a case of "pick any two because you can't have the third". Gordon Brown & Mandelson were laughing as much about "well we do not have to figure out the financial mess anymore, nor can we be blamed for it when it gets worse".

BAD thing for bond holders is that if this IS the bottom in yields, then the peak is some 12-15% North of here - which in Bond Price terms means your income is going to come from principal in effect. By that I mean potentially 70-81% loss in price over 20yrs due to the explosion in yield over that time. Of course housing would be toast so we are trying to treat an impossible path, in the dark, not knowing if the route leads anywhere and without any ease means to go backwards.

GOOD thing for DIYers is you may find prices remain keen or become keener as the year goes on in order to get the revenue up if only to maintain inventory turnover & feed the credit line monster. That is to say, I think you will find companies offer "less range, similar or better prices" since they substitute bulk-buy in place of breadth to "catch every dollar".

[<me9]

Or the extra VAT we'll have to pay.

[The Natural Philosopher]

Good analysis.

[The Natural Philosopher]

I think so 20% or 22.5% immediately will more or less solve the deficit crisis in the short term, and its an easy fix.

Expect it very soon.

[OG]

Increasing VAT from 17.5% to 20% increases prices by a little above 2%.

The dollar rate has changed by more than 10% in the last 4 months.

[The Natural Philosopher]

But we buy more stuff in pounds than in dollars.

and the guv mint makes money out of VAT, but it doesn't do covered short contracts on dollar-sterling rates.

Mind you, it could make a killing if it did, as one simple policy statement could net it a few billion betting against a bank.

Ultimate inside trade really.

[pete]

I fully expect the govt. to implement all the cuts it said it would. Plus all the cuts the other lot said they would. Plus all the cuts they (all) said they would _NOT_ implement and then about the same amount again. That might just do it.