[1andrew1]

Stepping away from theology, it's the time of Wall Street to take a look at the British economy's prospects. It makes for a somewhat sobering read.

Brexit’s Legacy Is Hotter UK Inflation Risk for Years Ahead

• ‘The economy is extremely fragile,’ says Citigroup strategist
• Brexit is a key reason why investors are still avoiding the UK

The UK will be stuck with searing inflation for years because of Brexit, according to strategists at Wall Street’s top banks.

Citigroup Inc., Bank of America Corp. and Standard Bank all see the UK as a outlier in the developed world because of the economic damage wrought by the decision to cut ties with the European Union. Even as price pressures start to fade elsewhere, they say UK inflation will be higher-than-normal because of immigration controls and supply chain disruption. A report Wednesday showed price pressures hitting a fresh four-decade high.

Inflation is a big reason why investors are bearish on the pound, even with the currency trading near a two-year low to the dollar. The view among experts is that Brexit isn’t the cause of the cost-of-living crisis, but it will make solving the problem harder in the UK than anywhere else.

To Bank of America’s Kamal Sharma, there’s a long list of reasons to still be negative on the pound. The economy is in poor shape and the BOE’s decisions are the subject of politicized attacks.

“As the pandemic headwind starts to fade, the UK will be left with this one big idiosyncratic shock,” he said. “For an economy that’s very reliant on domestic demand to drive the economy, that means you’re heading into a period of sub-trend growth, which is negative for the pound.”

Replacing access to the EU’s single market with labor and goods from elsewhere remains a challenge for the UK government, which has struggled to make headway on trade agreements. While the UK signed its first agreement with a US state last month, the piecemeal approach shows talks are failing to progress.

https://www.bloomberg.com/news/artic..._medium=social