Quote:
Originally Posted by superdez
There are a couple of reasons why the price of imported goods are higher in the U.K than US/Europe/Japan partly down to VAT, import duty etc, partly down to high property prices which feeds into higher wage demands and high rental costs.
You may also argue that various employment/trade/health & safety regulations have the effect of adding increased costs.
However, the main reason why prices are currently high in the U.K is that the £ has been devalued against dollar, yen and euro by around 30 to 40 percent since the credit crisis of 2008. Hence making imported goods more expensive than they were in 2007.
Devaluation, which incidentally was caused by quantitative easing and has been exasperated by 0.5% interest rates is great for the erosion of national debt through inflation, but not so great, if like the U.K is, a net importer of goods priced in dollars, yen etc.
An example of the hugely damaging policy that the bank of england and the government has embarked upon with regard to inflation and devaluation is fuel prices. During the crisis of 2008 oil rose to $150 a barrel yet petrol never rose above £1.20l. Today oil is trading at around $84 yet petrol is close to £1.40l
You also need to factor in the huge amount of quantitative easing that has gone on in america, which has caused a general spike in commodity prices globally.
Bit of a rant, but thats the main reasons.
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Absolutely nothing to do with devaluing of the pound to the dollar.
The pound anyone spends has almost the same value to the dollar, unless you work in currency exchange.
if this was the main reason for the price difference, it would not be worth importing goods from america indepenently, buying fom a U.S. shop, they would be too expensive. Its apparent the products are considerably cheaper in the states even INCLUDING the fact the pound is weak.
The post was about the reasons for the price difference, and the pound being weak is not the reason at all. Importers/Distributors pay import taxes, yes, but american import duties are usually higher, check with hmrc if you like.
And a GLOBAL commodity spike would affect prices GLOBALLY not explain one countries high prices compared to another.
There are many reasons why the prices are higher in the uk, transport costs, smaller market, higher sales taxes, etc, but the real reason in this case is the high prices charged to the model shops by the distributors.
Its ridiculous to blame the exchange rate when the exchange rate is the same for a private buyer. The model shops work hard and the distributors take the money, and thats how most business works in this country, whether you like it, or want to admit it, its true.