Brown squeezes us, the voters squeeze Brown

The figures this week show just how the squeeze on people’s incomes is intensifying. As readers of this blog will know. wages remain under strict control. Real wages (Wage increases after allowing for the increase in the Retail price Index) are now falling by 1% a year – they usually go up by around 2.5% a year. The RPI itself underestimates the cost increases of many family budgets. Food prices are now rising by 1.5% a year more than the RPI, and energy prices, taxes, government charges and petrol prices are soaring.

The squeeze will get worse in the months ahead. The government is determined not to absorb any of the pressure, so it all falls on the private sector. Companies are being more successful at pushing through price increases, so the squeeze within the private sector falls mainly on working people trying to live from their wages and salaries.

The squeeze partly stems from the government overdoing the costs and spending of the public sector. We are now reaching the days of reckoning, so taxes go up and consumers suffer. It partly stems from the ability of overseas suppliers to charge more for everything from oil to manufactured goods. The Chinese now expect better prices for what they make, as they have plenty of demand at home as well. Opec and the Russians are able to sell their oil for more, because Asia has demanded more oil. Governments worldwide – including the UK one – have see higher taxes on oil and oil products as an easy way out of their own overspending. That has made the position worse.

The continuing squeeze means two things. It means the inflation will not get out of control. It means the political outlook remains poor for Mr Brown, the main architect of the UK squeeze thanks to his tax and waste policy.

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5 Comments

  1. Matthew Reynolds
    Posted May 31, 2008 at 12:16 pm | Permalink

    My idea for adding a sunsetting clause to all QUANGO’s via a single Act Of Parliament to the effect that all these public bodies must have their ability to cost public money seperately renewed by a vote in Parliament or they cease to function within four years ( for new QUANGO’s the time limit is two years ) sounds more sensible by the day ! In those four years many QUANGO’s would be either hived off ( i.e. privatised so they charge business or individuals for their services directly and thus sink or swin on their own merits without burdening the taxpayer ) , axed as part of a bid to slash red tape by having fewer rules & regulations you need fewer people to do the admin or merged to nip duplication in the bud .

    On day one of a Tory government you could phase in two things that our economy badly needs – a 10% flat rate of corporation tax ( partly met by the end of business tax reliefs ) and a basic personal allowance of £14,000 p/a for all taxpayers ( partly funded by an end to most income tax breaks , tax credits getting the boot and fewer meanstested benefits for the working poor ). If you wish to protect people & business from the destructive impact of tax & spend then how about some radical ideas rather than handwringing platitudes ? 48% want tax cuts even if public services get less money and about 85% think taxes are too high . Steven McCabe admits high taxes caused younger voters to vote Tory in Crewe & Nantwich , Denis MacShane wants cuts in taxes & public spending to save Labour from losing the next general election and Nick Clegg wants a smaller state with some net cuts in taxation . The trend in favour of economic liberalism is clear – shaping economic policy accordingly by ditching our misguided commitment to match Labour’s high tax causing public spending plans is just commonsense . Tax cuts if costed are popular – time for messars Cameron & Osborne to wake up and smell the coffee ! Such a policy is hardly right wing extremism if parts of Labour & the Lib Dems want it as well !

  2. Cliff
    Posted May 31, 2008 at 1:07 pm | Permalink

    Perhaps the answer is to have another campaign similar to the one in the late sixties, early seventies, "I'm backing Britain."

    Opps, silly me, we can't can we? We've already destroyed all our industries that actually produced goods and even if we hadn't, the EUSSR wouldn't let us put our national interests ahead of those of the EUSSR, what ever they may be.

  3. Matthew Reynolds
    Posted May 31, 2008 at 1:16 pm | Permalink

    My idea for adding a sunsetting clause to all QUANGO's via a single Act Of Parliament to the effect that all these public bodies must have their ability to cost public money seperately renewed by a vote in Parliament or they cease to function within four years ( for new QUANGO's the time limit is two years ) sounds more sensible by the day ! In those four years many QUANGO's would be either hived off ( i.e. privatised so they charge business or individuals for their services directly and thus sink or swin on their own merits without burdening the taxpayer ) , axed as part of a bid to slash red tape by having fewer rules & regulations you need fewer people to do the admin or merged to nip duplication in the bud .

    On day one of a Tory government you could phase in two things that our economy badly needs – a 10% flat rate of corporation tax ( partly met by the end of business tax reliefs ) and a basic personal allowance of £14,000 p/a for all taxpayers ( partly funded by an end to most income tax breaks , tax credits getting the boot and fewer meanstested benefits for the working poor ). If you wish to protect people & business from the destructive impact of tax & spend then how about some radical ideas rather than handwringing platitudes ? 48% want tax cuts even if public services get less money and about 85% think taxes are too high . Steven McCabe admits high taxes caused younger voters to vote Tory in Crewe & Nantwich , Denis MacShane wants cuts in taxes & public spending to save Labour from losing the next general election and Nick Clegg wants a smaller state with some net cuts in taxation . The trend in favour of economic liberalism is clear – shaping economic policy accordingly by ditching our misguided commitment to match Labour's high tax causing public spending plans is just commonsense . Tax cuts if costed are popular – time for messars Cameron & Osborne to wake up and smell the coffee ! Such a policy is hardly right wing extremism if parts of Labour & the Lib Dems want it as well !

  4. mikestallard
    Posted May 31, 2008 at 6:03 pm | Permalink

    People in the Media (Radio 4) are now talking about the need for investors to find something safe now they are fleeing from currency and housing. How about oil and cereals? Hence, apparently, a lot of the price rise in petrol and grain.
    Round here the fields are uniformly viridian green with young cereals – all going on bio fuel. It reminds me of Mao when he gave the entire food stock of China to Eastern Europe in the hope that he would get the bomb in exchange (he eventually did). This misuse of our magnificent, fertile farms seems to me to be just about as daft.

    Of course, you're right when you say that the government will cop it.
    My own wish is that just a teeny weeny little bit will rub off, too, on Brussels.

  5. Adrian Peirson
    Posted May 31, 2008 at 11:37 pm | Permalink

    My Opinion is that the Worlds Economy is under a sustained and deliberate subversive attack by the Global elite, they intend to collapse the system, starve us into submission and force us to accept their Collective New World Order.
    http://www.prisonplanet.com

    Reply: The global elite does not have that cohesion or intent.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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