The Stagflation Panic Is Wrong — Here's What's Really Happening
In five weeks, UK markets went from pricing rate cuts to pricing four rate hikes. The word stagflation is on every front page. But did anything in the underlying economy actually change — or did a five-week war make everyone forget what was already happening?
In this episode, Neil Woodford and Jon walk through four structural deflationary forces that were pushing prices down before the Iran conflict started — and explain why none of them have been reversed by it. From Chinese goods deflation and the impact of AI on services, to the structural oversupply in energy and a UK labour market where demand is falling, Neil argues that inflation peaks below 3.5% and the pressure comes back down.
We also cover what this means for UK mortgages, gilts, savings and pensions — including why Neil would not fix a five-year mortgage at current rates — and Neil's view on the energy price cap, the Bank of England's next move, and why the UK desperately needs lower interest rates to unlock household consumption.
Stay to the end for our update on the Iran war scenarios from last week, including what the ceasefire actually means, why the Strait of Hormuz is still not open, and whether the probabilities have changed.
UK CPI for March is released on 22 April. The Bank of England meets on 30 April. We will cover both on this channel — subscribe so you do not miss them.
Watch Next
- Our previous episode on the Iran war scenarios: https://youtu.be/VK0ynNi2JfA
- Our episode on UK energy policy and North Sea resources: https://www.youtube.com/watch?v=-LypKyR2B8A
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