In fact if you borrow money on your credit card you can probably do it

In fact, if you borrow money on your credit card, you can probably do it for less now than you did a year ago.Which all goes to show that the MPC’s attempts to cool consumer spending are missing the target Admittedly they only have one weapon. Italy and Spain (to a lesser extent France) will start to experience similar pressures. Demography is certainly affecting social attitudes in Germany, encouraging the climate of caution, as shown by high savings and low business start-up rates. But it should still be possible to have some increase in consumption and, indeed, that would be needed if export growth falls off as suggested above.In any case – and this is what makes things interesting – a wind of change is starting to sweep across continental Europe One element to this is top-down reform. Germany is miserable, for living standards have been sinking for most of the past two years. But the situation in the rest of the eurozone is not quite so glum, for consumption has been rising at between 1 and 2 per cent.The issue is: what next? The bank takes the view that low German consumption is not just the hangover from the costs of reunification but a sign that the effects of adverse demography are starting to kick in. The need is for more entitlement payments and less investment in construction.

On the left, the growth or otherwise of eurozone exports is fitted to the real level of the euro (or its ancestor currencies) back to 1991, with the exchange rate inverted and plotted nine months ahead. The higher the euro exchange rate the greater the loss of exports, and vice versa It looks a convincing fit. If the lines continue to move together, eurozone exports should be suffering about now, since the euro was making gains nine months ago.The other graph shows the consumption problem. But now the outlook for the eurozone economy has improved sharply. This has been largely on the back of exports, for consumption – in Italy and Germany in particular – has remained flat.

Exports, however, seem less likely to provide the stimulus next year for two reasons. These include the view that the largest eurozone economy, Germany, entered the euro too high; that the European Central Bank has held interest rates too high, at least for Germany; that consumers have gone on strike in protest against the perceived rise in prices after the introduction of the euro; persistent high unemployment; the French and German short working weeks; budgetary pressures; lack of structural reforms – or alternatively, fear of such reform And so on.There is something in all this. One is that the recovery of the euro has made exporting tougher; the other is that the main driver of global consumer demand, the US, seems likely to ease back.You can see the pattern in the graphs, which come from a study by Bank of America. Might European consumers be about to loosen up at last? For the past three years, the continental economy has stagnated, held back by lack of consumer demand.
A host of explanations have been put forward to explain this. Nor should it.Mark Tinker is a director of Execution Stockbrokers. This will only enhance the relative attraction of property still further A quarter point here or there will not stop this happening. Remove it and you will trigger a large re-allocation of capital, in this case to lower yielding bonds.Well-intentioned moves to encourage disclosure of pension deficits by companies completed the move to turn the best funded pension scheme in Europe into a basket case and ultimately undermine the UK equity market.

And the natural response of the household? Channel more money into housing. Owning your own home on retirement is a key part of pension planning, and buy to let is the only way of borrowing to accumulate a pension asset, with tax deductible interest that offers a long-term stream of income that grows in line with wages.Moreover, there are plans to allow property to be incorporated into pension schemes from next year. It is often difficult to separate the Bank’s views from those imposed upon them by the army of pundits, most of whom display an alarming degree of sado-monetarism. For them, all signs of growth are intrinsically bad, and to be punished with higher rates. In effect, with higher taxes, since the mortgage rate acts like a tax on disposable income Take this week’s round of economic lunacy as an example. Retail sales were up 7 per cent in June, bringing on shrill cries for the Bank of England to stop the runaway consumer.