Photo by Matthieu Beaumont

Kubernetes on bare-metal is when your cluster runs on servers rather than virtual machines. This approach might not be the best but it offers a cheap alternative as well as increasing performance. In cloud-based Kubernetes clusters, cloud vendors expose services with Load Balancers, but those are unavailable in a bare-metal environment.

Don’t panic! You can still expose your services using a virtualized environment that offers the same user experience as cloud-based load balancers. The one that we are going to use today is called OpenELB and is an open source load balancer implementation for bare-metal Kubernetes clusters.

## Install OpenELB

You only need to install OpenELB once and it will take care of the rest or almost. The only requirement is that your Kubernetes version is 1.15+.

I’m going to show you how to install OpenELB using kubectl, but you can also do it with Helm3 if you’d like. Also you can find links to the documentation at the bottom of this guide.

1. Login in your Kubernetes cluster and run:

~~~
kubectl apply -f https://raw.githubusercontent.com/openelb/openelb/master/deploy/openelb.yaml
~~~

2. Check the status of the openlb-manager and wait until it changes to “Running”:

~~~
watch kubectl get po -n openelb-system
~~~

If you wish to delete OpenELB you just need to run:

~~~
kubectl delete -f https://raw.githubusercontent.com/openelb/openelb/master/deploy/openelb.yaml
~~~

If you want to check its deletion you can check your namespaces and if it’s not there then OpenELB has been deleted successfully:

~~~
kubectl get ns
~~~

At this point you need to choose in which mode you want OpenELB to run and if you don’t know where to start, then you'll probably want to use Layer 2 as there is no configuration required. If you are not sure which one to choose, below you can find a list of pros and cons I created.

## Layer 2 Mode

# Pros

* Not setup is required, perfect for beginners

# Cons

* When a failover occurs in the workers, the Services in the cluster will be interrupted for a short period of time.
* Bandwidth bottlenecks: the traffic is always sent to the first node and then forwarded to the other node and finally to the kube-proxy, having the bandwidth limited of a single node.
* Requires your infrastructure to allow anonymous ARP/NDP packets

## BGP Mode

A BGP is a gateway protocol that allows the internet to exchange routing information between Anonymous Systems (AS) via peering.

# Pros

* High availability
* No failover interruptions
* No bandwidth bottlenecks

# Cons

* Your router must support BGP or ECMP

## VIP Mode

# Pros

* All the pros from the BGP
* Doesn’t require your infrastructure to allow anonymous ARP/NDP packets

# Cons

* Vip mode is a beta and has not been fully tested. You may encounter unknown issues.

## Still don’t know which mode to use?

If you don’t care about High Availability etc… and you just want to learn how to use Kubernetes and have a private cluster to experiment with, your choice is Layer 2.

If you want to manage your own cluster for your applications and services, use the BGP mode.

And If your router doesn't support the BGP mode, but you still want to have high availability for your services and you’re not afraid of potential issues you might have, then your last choice is the VIP mode.

> If you are running a cluster as a personal project and/or to learn how to use Kubernetes, my suggestion is to avoid VIP and Layer 2 modes and use BGP. If your router doesn’t support it don’t worry, because you can install a virtual router using BIRD.

## Install BIRD

When you don’t have a router or one that supports BGP, you can use BIRD. It allows you to create a virtual router supporting BGP.

1. Run the following commands to install BIRD:

~~~
sudo add-apt-repository ppa:cz.nic-labs/bird
sudo apt-get update 
sudo apt-get install bird
sudo systemctl enable bird
~~~

2. Create the configuration file:

~~~
sudo vim /etc/bird/bird.conf
~~~

3. And paste the following configurations:

~~~
router id 192.168.0.5;

protocol kernel {
   scan time 60;
   import none;
   export all;
   merge paths on;
}

protocol device {
   scan time 60;
}

protocol bgp neighbor1 {
   local as 50001;
   neighbor 192.168.0.2 port 17900 as 50000;
   source address 192.168.0.5;
   import all;
   export all;
   enable route refresh off;
   add paths on;
}
~~~

4. Restart BIRD:

~~~
sudo systemctl restart bird 
~~~

5. Check the status of BIRD:

~~~
sudo systemctl status bird
~~~

Next, we are going to create the 3 objects that will make BGP possible:

* The BGP Conf
* The BGP Peer
* The EIP

The commands that follows consist in:

* create the yaml file
* pasting the configurations
* apply the Object

## Create a BgpConf Object

1. Create the yaml file:

~~~
sudo vim bgp-conf.yaml
~~~

2. Add configurations:

~~~
apiVersion: network.kubesphere.io/v1alpha2
kind: BgpConf
metadata:
 name: default
spec:
 as: 50000
 listenPort: 17900
 routerId: 192.168.0.2
~~~

3. Create the BgpConf object:

~~~
kubectl apply -f bgp-conf.yaml
~~~

## Create a BgpPeer Object

1. Create the yaml file:

~~~
sudo vim bgp-peer.yaml
~~~

2. Add configurations:

~~~
apiVersion: network.kubesphere.io/v1alpha2
kind: BgpPeer
metadata:
 name: bgp-peer
spec:
 conf:
   peerAs: 50001
   neighborAddress: 192.168.0.5
~~~

3. Create the BgpPeer object:

~~~
kubectl apply -f bgp-peer.yaml
~~~

## Create an Eip Object

1. Create the yaml file:

~~~
sudo vim bgp-eip.yaml
~~~

2. Add configurations:

~~~
apiVersion: network.kubesphere.io/v1alpha2
kind: Eip
metadata:
 name: bgp-eip
spec:
 address: 172.22.0.2-172.22.0.10
~~~

3. Create the Eip object:

~~~
kubectl apply -f bgp-eip.yaml
~~~

Now you can create your Deployment and Service yaml files by using the below configurations and applying.

## Deployment

~~~
apiVersion: apps/v1
kind: Deployment
metadata:
 name: <name of the deployment>
spec:
 replicas: 2
 selector:
   matchLabels:
     app: <name of the app>
 template:
   metadata:
     labels:
       app: <name of the app>
   spec:
     containers:
       - image: <username/image>
         name: <image>
         ports:
           - containerPort: 8080
~~~

## Service

~~~
kind: Service
apiVersion: v1
metadata:
 name: <service>
 annotations:
   lb.kubesphere.io/v1alpha1: openelb
   protocol.openelb.kubesphere.io/v1alpha1: bgp
   eip.openelb.kubesphere.io/v1alpha2: bgp-eip
spec:
 selector:
   app: <yourapp>
 type: LoadBalancer
 ports:
   - name: http
     port: 80
     targetPort: 8080
 externalTrafficPolicy: Cluster
~~~

## Check the LoadBalancer

Once you’ve done that, you can see if your LoadBalancer is running correctly by checking its External-IP:

~~~
kubectl get svc
~~~

# Conclusion

That’s how you set up a LoadBalancer for your bare-metal cluster. Obviously you won’t use the virtual router for a Production environment, but it’s useful when you want to run your private Kubernetes.

## Link to documentations:

* [https://openelb.io/docs/overview/](https://openelb.io/docs/overview/)
* [https://bird.network.cz/](https://bird.network.cz/)
* [https://en.wikipedia.org/wiki/Border_Gateway_Protocol](https://en.wikipedia.org/wiki/Border_Gateway_Protocol)

How to create LoadBalancer services on a bare-metal cluster?

Photo by Samuel Sianipar

In this guide I’m going to show you how to build a single-host cluster and share the common blockers that people encounter.  I will list all the minimum requirements needed for this project, but first a brief introduction to Kubernetes.

## Kubernetes

Kubernetes, also abbreviated to K8, is a portable open-source platform used to manage containerized workloads and services used for Software Orchestration. It was created by Google and kept hidden until 2014, when they decided to release it. The company realised that the number of services and applications built was growing quickly and impossible to maintain manually. For this reason they created a technology that allowed them to automate the management, configuration and coordination of all their products. After several versions and names it became the Kubernetes that we know today.

## Requirements

Kubernetes is a technology that keeps evolving and for this reason I would suggest you to use the same version described in this tutorial to avoid hiccups. I personally decided to build the cluster on a Raspberry Pi, but if you don’t have one - considering the current semiconductor criss - an old laptop would do. I highly recommend not using your personal laptop as the following changes may impact your network. Just make sure that you follow the below requirements:

* Kubernetes v1.24.1
* RedHat Enterprise Linux 7.x+, CentOS 7.x+, Ubuntu 16.04+, or Debian 9.x+
* x86-64, arm64, ppc64le, or s390x processor
* 2CPU
* 2GB RAM although 4GB is recommended
* 10GB free disk space

If you are setting up a cluster on a Raspberry Pi like me but not sure how much memory your machine has you can run the following command to find out:

~~~
grep MemTotal /proc/meminfo
~~~

## Install Ubuntu on Raspberry Pi (skip if not using RPi)

We need to install an OS on the RPi and to do it we have to prepare the boot image. I have decided to use Ubuntu Server as I’ve used in the past, but you are free to choose the compatible OS that you want.

* Go to https://www.raspberrypi.com/software/ and install the Raspberry Pi Imager.
* Select the driver SD Card or USB in which your installing the OS
* Stick the SD Card in your RPi and wait for the OS to be installed.
* At the login phase don’t forget to use ubuntu as username and password. You will be able to change the password after, so don’t worry.

If your RPi is not responding after sticking the SD card and you can only see the red light, it means that the OS image is not booting into the machine. There are many reasons why this could happen. Probably you saved the OS image in the driver using the \`dd\` command. If you use the RPi imager you shouldn’t have this problem.

At this point you can decide to run your commands directly on your RPi or SSH into it and run them from another device.

The SSH connection is easy, the only thing you need is the IP private address of your device and getting this information is relatively simple. Just install the net-tools if you haven’t already and use the ifconfig command.

~~~
sudo apt install net-tools
ifconfig -a
~~~

If you are connected with an ethernet cable you can check the eth0 and next to the inet value you should see the IP private address. Do not share your IP private address with anyone. This info is not exposed othside your network and for a good reason.

## Docker Installation

Now let’s setup Docker. First thing first, we are going to install it:

~~~
sudo apt install -y docker.io
~~~

**Docker Configuration**

Now we need to make sure that the Linux Kernel will isolate our containers from another by enabling Control Groups. We are going to accomplish that by changing the daemon.json as follow:

~~~
sudo cat /etc/docker/daemon.json <<EOF

{

  "exec-opts": ["native.cgroupdriver=systemd"],

  "log-driver": "json-file",

  "log-opts": {

    "max-size": "100m"

  },

  "storage-driver": "overlay2"

}

EOF
~~~

Now we are going to enable limit support at boot by adding the following configuration in the kernel file. The location of this file is different from OS:

* Raspberry Pi 4:  /boot/firmware/cmdline.txt
* Ubuntu 20.4: /boot/config-$(uname -r)\* .config

Run the following command:

~~~
sudo sed -i '$ s/$/ cgroup_enable=cpuset cgroup_enable=memory cgroup_memory=1 swapaccount=1/' <location-kernel-config-above>
~~~

## What swapaccount=1 does?

Before, I mentioned to you why we need to enable the Control Groups (cgroup). Now we also need to enable swap accounting that the Arch Linux Kernel disables by default. When the kernel detects that there is not enough memory to perform important tasks, it will start killing processes to free up the memory. Obviously Docker will be at risk of being terminated if this happens, resulting in your containers being killed. To avoid that Docker adjusts the OOM priority on the daemon so that it is less likely to be killed than other processes on the system.

## Configure iptables

Iptables needs to be configured to see bridged network traffic:

~~~
cat <<EOF | sudo tee /etc/sysctl.d/k8s.conf

net.bridge.bridge-nf-call-ip6tables = 1

net.bridge.bridge-nf-call-iptables = 1

EOF
~~~

## Install Kubernetes

Let’s follow the same instruction found in Kubernetes’ documentation:

​​1. Update the apt package index and install packages needed to use the Kubernetes apt repository:

~~~
sudo apt-get update
sudo apt-get install -y apt-transport-https ca-certificates curl
~~~

2\. Download the Google Cloud public signing key:

~~~
sudo curl -fsSLo /usr/share/keyrings/kubernetes-archive-keyring.gpg https://packages.cloud.google.com/apt/doc/apt-key.gpg
~~~

3\. Add the Kubernetes apt repository:

~~~
echo "deb [signed-by=/usr/share/keyrings/kubernetes-archive-keyring.gpg] https://apt.kubernetes.io/ kubernetes-xenial main" | sudo tee /etc/apt/sources.list.d/kubernetes.list
~~~

4\. Update apt package index, install kubelet, kubeadm and kubectl, and pin their version:

~~~
sudo apt-get update
sudo apt-get install -y kubelet kubeadm kubectl
sudo apt-mark hold kubelet kubeadm kubectl
~~~

In the last command we are disabling the updates for these packages. Upgrading Kubernetes always requires a manual review.

## Create the cluster

~~~
sudo kubeadm init --pod-network-cidr=192.168.0.0/16 —v=5
~~~

Follow the instructions below:

~~~
mkdir -p $HOME/.kube
sudo cp -i /etc/kubernetes/admin.conf $HOME/.kube/config
sudo chown $(id -u):$(id -g) $HOME/.kube/config
~~~

## Install Calico

1\.Install the Tigera Calico operator and other resource definitions:

~~~
kubectl create -f https://projectcalico.docs.tigera.io/manifests/tigera-operator.yaml
~~~

2\.Install Calico by creating the necessary custom resource.

~~~
kubectl create -f https://projectcalico.docs.tigera.io/manifests/custom-resources.yaml
~~~

Before creating this manifest, read its contents and make sure its settings are correct for your environment. For example, you may need to change the default IP pool CIDR to match your pod network CIDR.

3\.Confirm that all of the pods are running with the following command.

~~~
watch kubectl get pods -n calico-system
~~~

Wait until each pod has the STATUS of Running.

The Tigera operator install resources in the calico-system namespace. Other install methods may use the kube-system namespace instead.

4\.Remove the taints on the master so that you can schedule pods on it.

~~~
kubectl taint nodes --all node-role.kubernetes.io/master-
~~~

It should return the following:

~~~
node/<your-hostname> untainted
~~~

5\.Confirm that you now have a node in your cluster with the following command.

~~~
kubectl get nodes -o wide
~~~

It should return something like the following:

~~~
NAME              STATUS   ROLES    AGE   VERSION   INTERNAL-IP   EXTERNAL-IP   OS-IMAGE             KERNEL-VERSION    CONTAINER-RUNTIME

<your-hostname>   Ready    master   52m   v1.12.2   10.128.0.28   <none>        Ubuntu 18.04.1 LTS   4.15.0-1023-gcp   docker://18.6.1
~~~

Congratulations you have just created your first cluster!

## Restart from scratch or reset

If for some reason you want to start from scratch and delete all the configurations above, you can run this list of commands. Deleting these files will allow you to have a clean state again.

**Remove configurations**

~~~
sudo rm -r /etc/cni
sudo rm -r /etc/cni/net.d
sudo rm -r $HOME/.kube/
sudo rm -r /etc/kubernetes/kubelet.conf
sudo rm -r /etc/kubernetes/pki/ca.crt
~~~

**Stop the kubelet**

~~~
systemctl stop kubelet
~~~

**Reset cluster**

~~~
sudo kubeadm reset
~~~

## Debugging - Master node is not ready

Your master node’s status is ‘not ready’. There are several reasons why. The best way to find what’s wrong is by describing the node:

~~~
kubectl describe node <node’s name>
~~~

In the conditions sections you have:

* Network Unavailable
* Memory Pressure
* Disk Pressure
* PID Pressure
* Ready

Those are the main reasons why your node is not working properly. If the Ready condition is set to false, check the reason, and if you have:

*KubeletNotReady	…NetworkPluginNotReady cni plugin not initialised…*

This means that you haven’t (properly) configured the CNI. Install calico and if you have done it already, make sure that the calico-controller is running and not pending.

## Debugging - Calico kube controllers is pending

Most likely your node had a taint that doesn’t allow you to reschedule your controller. Identify the taint and remove it from the pod:

~~~
kubectl describe node <node’s name> | grep Taints
~~~

Remove the taint by adding “-” at the end as the following command:

~~~
kubectl taint nodes <node’s name> <name of taint>-
~~~

## Links to resoursces and documentations

* [Installing kubeadm](https://kubernetes.io/docs/setup/production-environment/tools/kubeadm/install-kubeadm/)
* [Quickstart for Calico](https://projectcalico.docs.tigera.io/getting-started/kubernetes/quickstart)
* [Understand the risks of running out of memory](https://docs.docker.com/config/containers/resource_constraints/)

How to build a Kubernetes Cluster?

How to Create a Kubernetes Cluster?

Photo by Marco Gattello

It all started from "Hey, you are Jonny, I saw you on Dragons Den” and after 4 hours of interviews, to “Marco! We really like you and want you to be on board”.

I’ve just finished my 6 months of contract and founded The Wild Touch LTD, my first dive into affiliate marketing. I thought that working for a startup would have been the perfect next step for me. And that’s when I started to look for new opportunities. Trying to keep doing what are you good at, was the lesson I learned. My experience working with retailers and as a founder of The Wild Touch LTD led me to consider applying for a startup named Pouch. That’s when I first learn about Shopping Assistants.

# **The interview**

The process of hiring people in a startup is not the same as that of other companies. Yes, you might have the same frame and stages but that may end up being a bit unconventional.

The first step was a filter interview where they asked me questions to assess my technical knowledge. I remember ending up talking about the Critical Render Path in a lot of detail. After successfully passing the first stage, the second step was an interview vis a vi.

My first introduction to Pouch was with the Co-Founder Jonny Plain. People on television always appear bigger than they are. It’s really true. The first time I saw Jonny was on Dragons Den, presenting a methodic pitch to the dragons and exiting the room with a deal from 3 of them.

My first impression of Jonny was that he’s an enthusiastic person, happy to be recognised and associated with a big show such as the Dragon’s den. Obviously, after shaking hands, we started talking about my experience in retail, affiliate marketing and about Pouch and its vision. After that, I was supposed to have a 1-hour technical interview with the Senior Developer and another hour to meet the rest of the team, the CTO, the Product Manager and a Junior Developer.

After 4 long hours spent in the office, I had what I thought would be the final meeting with again the Co-Founder and the CTO. “Marco! We really like you and want you to be on board” said Jonny. I couldn’t contain my excitement, but my past experience as a Salesman reminded me that: is never a done deal until you sign. So I tried to keep my emotions in check.

I had ongoing interviews with other startups, and Pouch was one of the top 3 I was considering. For this reason, I decided to move forward. The last stage was with the CEO of the GSG UK office. Turns out that Global Savings Group was the company that ended up, acquiring Pouch. What happened to the deal with the Dragons? Keep reading to find out.

After a brief meeting discussing my passions and past experience, I was told that I would have received an offer in the incoming week. Finally, the offer arrives. After finishing all the other interviews and a careful evaluation, I decided that working at Pouch would have been the right choice.

# **The job is never the one on paper**

I wanted to make a good first impression and also show my willingness to learn. For this reason, I would show up before everybody else and be the last one to leave. In the morning I would focus on certain topics that I wanted to be better at. Whether to learn a new design pattern or maybe just read something new about browser extensions.

Months passed and I’m familiarizing myself with the tech stack, tools and code. I’ve worked on multiple tasks already. The environment is relaxed and we are still having a small team. Didn’t really have someone to guide me or a mentor, but I was quite happy to find my own path and learn things along the way. I felt it was great to have the flexibility and the curiosity to search for my answers.

In a startup, you don’t have defined processes. I’m not going to lie, sometime you might have the feeling that we were disorganised or not aligned on things, but that was partially due to disruptive events or again to the fact that Pouch was a startup. We had to improvise and make the most of the resources we had at hand. Without forgetting the last-minute bug on a Friday night.

Along the way we had lost our Product Manager at the same time our Senior Developer decided to leave. It was though, but I didn’t care that much as I was more focused to get things done. At that moment we needed to be Developers, Engineers and Project Managers. You would have worn multiple hats at the same time.

# **The road is not the map**

A year is passed and I’m now familiar with the Business Structure, the different departments etc… We finally have a clear roadmap and one part of the plan is to work on a new market in Germany. We start to hire people to develop relationships with german retailers and in the meantime we keep working on the UK market.

It is now that I started to unravel part of the mystery around the Dragon’s deal and more. I never asked Jonny what happened with the dragons, also because at that time I was too busy and focused on the job at hand. Looking back I wish I would have taken the time to ask.

Global Savings Group is a platform for Commerce Content with 100+ digital assets from the world’s leading publishers. In the UK, for example, operates the discountcode.dailymail.co.uk website. Pouch was launched to the public in 2016 and sold to GSG in January 2019. Here’s when Pouch received the necessary push to hire new people and when, the role I will then fill, came into existence. “What about the Dragon’s deal?” You might ask. It never happened.

In the same year, GSG will acquire iGral a French cashback company and in January 2021, Shoop another cashback platform, this time, based in Germany. After this last acquisition, we had to stop all our efforts with the German Market. GSG's plan was very simple, become the European market leader.

> “The deal strengthens GSG’s position as European market leader, building the largest global digital rewards, savings, and shopping content platform,” says Gerhard Trautmann, CEO of the GSG, in an interview happened the 8th January 2021.

All the effort made in Germany had to cease and the question now was: what’s next?.

# **The loyalty platform**

After an entire year at Pouch, I was ready for the next level. My work with the Dynamic Landing Pages was a success. Without even noticing, I became a point of reference. People started to come to me to ask questions. My strong attention to detail was a quality, recognised by many; in particular, by the new Product Manager, that decided to give me the opportunity to become the Front-end Team Lead for the new incoming project: the Pouch Loyalty Platform.

I was hiped by the idea of having a team to work on this project. The problem was, there was no team. In the beginning, it was just me. The plan was to build a loyalty platform while creating the team. Tedious of course, but exciting nonetheless. Without too many comments, I started working on the project and in the meantime, helped with the interviews.

Fast forward to 5 months we finally hire 2 new Developers that are going to help with the platform. Only 1 month left to the end of the project. There was no time to waste, but decided to onboard the new hires the best I could. Spending time to pair-programme together was an investment for me and Pouch. The better the onboarding, the quicker the new hire could have been an active contributor to the team and the project. After several delays with the deadline, we successfully released the loyalty platform.

I was thrilled and exhausted. Although the team was created almost at the end of the project, I was grateful that I could count on other people to finish this project. Through interviews, onboarding and other hiccups like people leaving and a global pandemic, It was a never-ending list of obstacles to overcome and distractions that would challenge our creativity and our ability to solve problems. I had to recharge and take a break.

Due to COVID and being busy with the project, I decided to see my family in Italy after a long absence of 2 years. This is when I started to reflect on my next steps. I wanted to have a clear mind and decide what to do next. The latest company’s acquisitions made me think about the future of Pouch and also MY future as Software Engineer.

# **The final decision**

In my entire journey at Pouch, I had the opportunity to see the evolution of this product. From a basic extension that would apply code for you, to an entire loyalty platform with rewards for its customers. From the Affiliate Marketing business to the Coupon and Cashback industry. At Pouch, I did not only have the opportunity to specialise myself and strengthened my Front-End skills, but also learnt and became an expert in this industry.

When I took my break to think about my next move, I looked back and started to have a more distant view of things. I didn’t have any Pouch shares, and even if I wanted I couldn’t buy any. Didn’t have any perks or benefits. The team was changing continuously. In fact, I was the only developer left in 2019. Instead of promoting within the team, the decision was always to hire new engineers. My only emotional attachment was to the project and my work.

Also, the latest acquisition of Shoop, made me doubt the potential growth at Pouch. Adding the global pandemic to the mix, in the end, I decided to leave. Several months later my departure, to my surprise, I saw a LinkedIn post from Jonny announcing that he was leaving Pouch to start something new.

Working in a startup in the coupon industry, voice from an insider

Photo by Marco Gattello

Thursday 16th December will sign the end of the lowest interest rate in the UK’s history. The Bank of England will revisit the rate due to the inflation estimated to rise above 5% in the next Spring. A speculative view on the topic might show an increase from 0.1% to 0.25% by the monetary policy committee (MPC). A more drastic approach could be to take the interest back to 0.5% as it was in the period between 2009-2016 but still, it’s speculation.

![Img](https://a.storyblok.com/f/100876/2340x1000/8cefd25a0b/boe-database_export.png)

> [History data from the Bank of England](https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate)

## Why did the BE decide not to increase the interest rate now?

In an interview dated 5th of November, Andrew Bailey (Governor - Bank of England) explains why the interest rates have not been raised already:

> “… our latest forecast we think … \[inflation\] … will probably peak sort of Spring next year and then start to come down around 5%. What we have signalled today ... is that we do think that interest rates will need to rise that the official rate will need to rise. We haven't done it today (it was a very close call)... and the reason we haven't done it is because we still need in our view to see hard evidence particularly of the state of the job market in this country, that's important.”

It may be counterintuitive but the furlough plan that ended in September is blurring the view on our national employment. We need a more detailed picture.

## UK’s economy today

> \[Data from the [Office of National Statistics’s website](https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/abmi/pn2)\]

Let’s take a step back and check how the situation was before COVID. UK’s GDP was £565,109 m in 2019 Q4. When COVID happened it plummed to £549,856m in 2020 Q1, fell to £442,274m in Q2 and then recovered to £519,390m in Q3 the same year. It took until 2021 Q3 to raise to £553,412m, almost back to the pre-crisis value. So looks like our economy is almost back to the pre-covid era, but we can’t have the full picture until the Q4’s data is released on the 22nd of December this year. Now let’s dive into the labour market.

# UK’s Employment and Unemployment, time period  June-August 2021

The employment (all aged 16 to 64) rate was estimated at 75.3%, so -1.3pps than during Dec 2019 - Feb 2020, but +0.5pp than the previous Quarter.

The unemployment (aged 16 years and over) rate was 4.5%, so +0.5pp than during Dec 2019 - Feb 2020. To put things in perspective, the 2008 crisis had an unemployment rate of \~8%.

It’s hard to draw a clear picture if we consider other data, such as the increase in inactive labour and part-time workers. One thing for sure is that young people (16 to 24 years) have been particularly affected by the pandemic. However, on a positive note, there was a record increase in the employment rate and decreases in the unemployment and inactivity rates for young people.

# Inflation rates

According to the Consumer Price Index (CPI), inflation reached 4.2% this October and is expected to increase above 5% next Spring. The Bank of England’s goal is to keep it steady at 2%. The goods-products that have been affected the most:

* energy
* petrol & gas
* building materials, houses
* computer chips, cars, washing machines, smartphones

Petrol’s prices have climbed from \~$40 a barrel in 2020 to \~$70 in Sept 2021 (Brent crude oil price). The demand for oil and gas is pushing up energy prices worldwide. Also, it’s fair to mention that increases in price for petrol and energy are following the worldwide trends and result from BREXIT.

On another side, the overall shortage of semiconductors is making it hard if not impossible to meet the industry demand. All of that translates into price increase for products such as cars, washing machines, smartphones etc…The same thing is happening with building materials, delaying the construction of new houses and consequently increasing their price.

## Housing market

The UK’s average house price increased by 11.8% in September 2021, bringing the average value to a record high of £270,000. Also, it’s worth mentioning that since May 2021 we surpassed 2008’s values twice. Among other reasons, this can be explained partly by the Stamp Duty Land Tax holiday, allowing new buyers to enter the market. Its impact was so powerful that the government decided to postpone the end of the holiday twice. We can still wonder who benefitted from all this…

Another reason prices in real estate increased, is the Government’s initiative to help people buy their first property, I’m talking about the Help-to-buy schemes. Simply explained, the government is trying to help first-time buyers to buy a new property with either a loan to help with the cost of a new-build home or through shared ownership. Nonetheless, this helped pump the already salty prices of houses in the entire UK.

## Sterling’s value

The power of the UK’s currency has overall improved: we saw an improvement starting from 2018 that increased the power of the Sterling over the US Dollar and then slowly caught up to 2019’s value until today. Similar results can be seen in the exchange GBP/EUR with a nice jump from £1.1123 to £1.1831 from 2018 to 2019. Coming down to £1.1192 by the end of 2020 and back to £1.1746 today. We still have half of December to go, and anything could happen until the end of the year. Having said that, this quick overview gives a good idea of how the UK’s currency is doing. Other countries are deliberately left outside.

![Img](https://a.storyblok.com/f/100876/628x389/eab926f567/gbp_eur.png)

![Img](https://a.storyblok.com/f/100876/600x371/834be6326c/gbp_usd-1.png)

# Conclusion

Understanding the dynamics of Finance and the Economy is not an easy task. The variables involved are numerous, but you’re not prevented from doing some research to get a good picture of what’s happening. Having said that, what we saw is that the UK’s economy looks stable, despite the status of employment being unclear, we saw some positive results leading us to believe that we are not facing a crisis yet. We might see some adjustments in the next future over the stock market, inflation is pumping the prices so high that it is difficult to understand the real companies’ value.

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