Inflation nears its modest peak in the Euro area and the UK

Inflation has risen by similar amounts in Europe, the UK and the US. Yesterday the Euro area figure for April hit 1.9%, compared to minus 0.2% a year earlier. German inflation reached 2%, compared to minus 0.3% a year earlier. UK inflation at 2.7% compared with plus 0.3% a year ago has risen almost identically to German inflation over the last year, implying the UK inflation is not to do with sterling or Brexit as some allege.

The annual UK figure for April inflation at 2.7% reflected higher energy prices over the year. 30% of the price rise came from transport, with a surge in airfares for Easter a particularly strong item for April, and higher Vehicle Excise Duties adding to the pain. 22% of it came from household items, where Council tax rises and dearer electricity were two of the big movers. Motor fuel prices fell a little, after being the dominant cause of inflation for the last year.

There are no signs of a wage/price spiral developing as it used to do in the last century. There is not much evidence of companies pushing through price rises to offset the fall in sterling that has taken place over the last two years, though where they can companies seek a small rise as some compensation for general cost pressures. It is interesting that on both sides of the Atlantic with differing patterns of currency performance, the rise in inflation has been so similar. It mainly reflects energy and commodity prices, with some price pressures from China on her exports. Later this year unless there is another oil and commodity price surge, inflation might fall back a little.

Published and promoted by Fraser Mc Farland on behalf of John Redwood, both at 30 Rose Street Wokingham RG40 1XU

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91 Comments

  1. formula57
    Posted May 18, 2017 at 5:31 am | Permalink

    Will Finance Minister Schäuble explain Germany’s inflation by blaming Brexit I wonder?

    • Hope
      Posted May 18, 2017 at 9:17 am | Permalink

      JR, can we trust any figures produced by the Tories or any promise in its manifesto? Hammond has kicked deficit elimination to 2025 ten years more than Osborne first promised, care home costs in 2015 promised and abandoned, today more fake promises. Osborne makes clear in his paper there is no intent in cutting immigration, no wonder we have record amounts under May, despite this more false promises. We had promises from Carney about inflation, interest rates etc when doing Osborne’s bidding. are these forgotten?

      Come on, please be honest with us even if your govt will not.

  2. Lifelogic
    Posted May 18, 2017 at 5:45 am | Permalink

    Companies have had to fund enforced pension contributions, apprenticeship levies, increases in business property taxes and the rise in the minimum wage. This has left many businesses without the capacity to do very much in the way of other increases or investment.

    Soon they will have other distrations, insanities and costs too – like worker on boards, building on EU worker “rights” and gender pay reporting forced on to them to make matters even worse. The central management of businesses by daft laws from misguided socialist politicians like Osborne, Hammond & May is very damaging to businesses and their productivity.

    All of this hits pay and jobs. Do people want more “workers rights” and daft political correctness, but with lower pay, lower productivity, fewer good jobs and a weaker economy or just better pay, a stonger economy, more freedom and more alternative jobs?

    It is clear that May’s government will get the former. Clearly less damaging than Corbyn’s agenda would be but profoundly misguided and damaging.

    It is also clear that May and Hammond are planning yet more huge tax increases and getting rid of the tripple lock. The UK economy is desperate for some cutting and simplification of taxes. The last thing needed is futher increases and yet further complexity.

    • Lifelogic
      Posted May 18, 2017 at 6:22 am | Permalink

      http://www.telegraph.co.uk/news/2017/05/17/middle-class-pensioners-lose-benefits-tory-plan-fund-social/

      Essentially cuts for pensioners and yet more tax increases on the way for the responsible, the last thing the economy needs. When will the government address the endless waste in bloated government, scrap the climate change act, cut the mad grand projects, cut taxes and do what would work?

      They claim this done because the elderly worry about their children not being able to manage (so the state is going to take if off them to reduce their worries). They could of course just leave it with the elderly and then these elderly give it to their children themselves if they wanted or to charity. But clearly the government prefers just to steal it off them and waste most of it in the process.

      • Lifelogic
        Posted May 18, 2017 at 9:44 am | Permalink

        What is wrong with the far more efficient and direct bank of Mum and Dad? Cut out the dreadful state sector middle men and encourage people who take responsibility rather than augmenting the feckless.

  3. matthu
    Posted May 18, 2017 at 5:54 am | Permalink

    How much are higher energy prices self-inflicted by a government committed to subsidy of renewable technologies?

    All this mumbo jumbo about price caps and the like when it is climate change policy and failure to commit to fracking that is engineering higher prices.

    • agricola
      Posted May 18, 2017 at 8:55 am | Permalink

      Absolutely spot on. I speculate on what clarification on green nonsense and fracking we might get in the conservative manifesto.

      • Bryan Harris
        Posted May 18, 2017 at 11:07 am | Permalink

        Yes – Absolutely right!

      • Thwacked
        Posted May 18, 2017 at 1:43 pm | Permalink

        agricola
        I don’t know whether fracking companies can suvive here. Some US ones can make a profit on oil, don’t know about gas, as low as $40 a barrel. But they unlike here have in practical terms an infinite amount of land to do continous and contiguous fracking drills.Their method of financing also is dependent on that procedure. Let’s hope the fracking companies have prepaid their licences to the goverment and local authorities and then they can take their hook without almost literally undermining our great land.

    • Know-dice
      Posted May 18, 2017 at 9:01 am | Permalink

      And don’t mention “Smart Meters” that are not so smart and incompatible across the various suppliers and systems.

      I know that suppliers can remote read the meters seems that they can remote disconnect customers as well…

      Suppliers will go through exactly the same rigorous Ofgem managed process before disconnecting a customer’s supply as before, the only difference is that an engineer doesn’t need to visit the property

      http://www.energy-uk.org.uk/customers/about-smart-meters.html

      How convenient, oops we accidental disconnected you sir/madam…just pay your bill and we will re-connect you…

    • Bryan Harris
      Posted May 18, 2017 at 11:08 am | Permalink

      Excellent points – Agree totally.

    • stred
      Posted May 18, 2017 at 12:09 pm | Permalink

      Having been over and watched M.Macron’s address to parliament, when he had returned from visiting the Euroboss, he may have taken her advice on electricity provision. German consumers have the highest bills, except for the Danes, and the most wind and solar, along with lignite to keep the lights on. Now he is going to speed up a national reconstruction plan including Mme Royal’s plan to get rid of their highly successful nuclear stations and replace them with windmills, solar and biofuels. He didn’t explain what they were going to use to fill in the missing bits. Etc ed

      Quite how he is going to pay for all the state reconstruction projects and keep Mrs M happy without more borrowing, taxing and screwing private enterprise, he didn’t explain either.

    • Lifelogic
      Posted May 18, 2017 at 8:59 pm | Permalink

      Exactly but almost nothing at all from Chairman May on the greencrap agenda.

  4. Mark B
    Posted May 18, 2017 at 6:07 am | Permalink

    Good morning

    It all depends on how inflation is calculated. Naturally wage inflation is depressed due to high levels of immigration and competition in the jobs market. But I struggle to understand why commodity prices are not driving prices up. The cost of food and services,to me at least, seems to be rising far higher than that stated. Also, the cost of local and national government seems to be rising with less service. This in the long term cannot continue.

    • Hope
      Posted May 18, 2017 at 9:20 am | Permalink

      Mark, Spot on. I am finding the same. I simply do not believe the figures. Community charge is soaring, yet services deminishing, government needs to get a grip.

      Part-time unqualified nod as an MPs given 10 percent rise while capping public service nurses at 1 percent! Plus expenses and exemptions in tax!

    • Mitchel
      Posted May 18, 2017 at 9:41 am | Permalink

      And then there’s shrinkflation – the 90g chocolate bar that used to be 100g,the multipack of 7 crisps that used to be 8 and,most disturbingly,I bought a box of Etc ed

  5. eeyore
    Posted May 18, 2017 at 6:24 am | Permalink

    “There are no signs of a wage/price spiral developing . . .”. Thorold Rogers remarks somewhere that since the 12th century the wage of a skilled English working man has been roughly half an ounce of gold a week.

    As gold is about £1000 an ounce, and the average wage about £500, the relation holds to this day. Why it should be so, and what it might say about the economy, I have absolutely no idea.

    • Mitchel
      Posted May 18, 2017 at 9:45 am | Permalink

      Someone also worked out that,in terms of gold,a Roman patrician toga cost broadly the same as a bespoke suit does today.

      • Rhôneman
        Posted May 18, 2017 at 12:42 pm | Permalink

        Yes but what did fish,chips and mushy peas cost in Roman times?

  6. Roy Grainger
    Posted May 18, 2017 at 6:39 am | Permalink

    Yet another failure by the BoE in their attempts to hit their target of 2% inflation – about time they took that seriously (by starting to increase interest rates) or abandoned the target. I notice the left-wing press (BBC) reported the latest figures with glee because they are now higher than average wage growth.

    • Mockbeggar
      Posted May 18, 2017 at 10:25 am | Permalink

      Average wages have gone down because the number of people in employment has gone up usually at lower wage levels than the average. Add in the fact that as older (and generally better paid) workers retire, they are replaced by younger, less well paid, staff. So ‘average’ wages may have gone down, but the wages of people in continuous employment has, generally, gone up.

      This is never mentioned by the BBC commentators.

      • Tskker
        Posted May 18, 2017 at 1:34 pm | Permalink

        Mockbeggar
        You seem to suggesting the BBC is biased. Tsk!Tsk!

        • Lifelogic
          Posted May 19, 2017 at 4:53 am | Permalink

          Oh no the BBC is independent, accountable and has to be balance by law.

          It is just a coincidence that amost every single person them employ has the same lefty, greencrap, pro EU, PC, big state, views of the Guardian.

  7. Richard1
    Posted May 18, 2017 at 6:51 am | Permalink

    I hope we will get a more rational monetary policy after the election. Mr Carney needs to stop trying to save us from his anticipated Brexit recession.

    • Chris
      Posted May 18, 2017 at 10:17 am | Permalink

      I feel strongly that Mr Carney needs to be replaced, and sooner rather than later.

      • Bryan Harris
        Posted May 18, 2017 at 11:06 am | Permalink

        Agreed!!!

  8. Original Richard
    Posted May 18, 2017 at 7:30 am | Permalink

    “There are no signs of a wage/price spiral developing as it used to do in the last century.”

    This is because companies have been able to easily import an inexhaustible supply of cheaper immigrant labour from the EU and beyond.

    300,000 net immigration each year and 900,000 people in the UK from one eastern European country alone.

    Such large migration flows are neither good for the donor nor recipient countries.

    • Hope
      Posted May 18, 2017 at 9:27 am | Permalink

      We are subsidizing cheap Labour for big business, tax credits, family allowance, houses, hospitals, schools, community charge care homes. Meanwhile corporation tax cut further, banks continue to get help, bankers have huge bonuses and the ordinary person cannot get any interest rate in their savings and forced to sale their own home! Good plans Tories. Call yourselves New Labour and be proud if what you are doing.

    • Denis Cooper
      Posted May 18, 2017 at 10:15 am | Permalink

      There are those who believe that the more migration the better.

      Most do not dare to come out and admit that they actually believe we should have a completely open door immigration policy; like Osborne they attack the limit which has been officially proposed by the Tory party, without explicitly saying that there should not be any limit at all.

      But that is what they really want; they are part of the very small minority who reckon they know better than the great majority who want the UK to take back complete complete control of its immigration policy, and in most cases want drastic reductions in the volume of immigration.

      However national rather than EU control of our immigration policy must come at a price, declares the Empress Angela:

      http://www.reuters.com/article/us-britain-eu-merkel-idUSKCN18D1U5?il=0

      “”If the British government ends the free movement of people, that will have its price,” the centre-right chancellor said.

      “That’s not malice,” she added. “(One) cannot expect to have all the good sides and then say there will be an upper limit of 100,000 or 200,000 EU citizens, no more, or just researchers, but please nobody else. This will not work.””

      But of course it is malice, and the more she says the more obvious that becomes; so how should we react to that? Grovel before her, or defy her?

      Etc ed

  9. Ian Wragg
    Posted May 18, 2017 at 7:34 am | Permalink

    On all parameters the interest rate should have risen. ZIRP is the governments way of pauperising the population to the advantage of the banks.
    Inflation is due to Carney dropping interest rates after the referendum when they should have been raised.
    I see Merkel is threatening to disrupt the car industry if we don’t allow unrestricted free movement after Brexit.
    Well that gives the manufacturing companies time for product substitution and I think a boycott of German goods.
    Doesn’t she realise she is helping harden the UK stance on Brexit etc ed

  10. Bob
    Posted May 18, 2017 at 7:38 am | Permalink

    I hear that Mr Hammond has again postponed the elimination of the deficit for another ten years.

    With the huge amounts of interest we are now paying to service the borrowing, how can your government justify the ring fenced foreign aid budget. You’re are shoveling money overseas even when they is no clear purpose for it just to meet this arbitrary 0.7% target.

    This disqualifies you from calling yourselves the Conservative Party.

    In the meantime the BBC report that GP practices are faced with shortages of funding and staff, while demand is increasing. We are also constantly told by the BBC that the influx of 300+ thousand immigrants p.a. is good for the NHS. There seems to be a contradiction here, it would appear that immigration is increasing the burden of the NHS rather than alleviating it.

    And lastly who is going to fund and support all of the imported care workers when they need care themselves? Seems like our govt is storing up huge problems for future generations. Do you actually have a plan?

    • Hope
      Posted May 18, 2017 at 9:23 am | Permalink

      Bob, you are right and we are expected to pay twice for adult social care in our community charge and then still forced to sale our homes to pay for our own care! This is worse than communism. Why, for May’s mass immigration programme from the third world or Eastern Europe?

    • Beecee
      Posted May 18, 2017 at 11:24 am | Permalink

      It is a disgrace the way we are squandering money on foreign aid and the consequences of the Climate Change Act.

      Reducing our carbon emissions will have no beneficial result on climate change whatsoever. Our politicians know this but prefer the vanity posture of ‘we in the UK are doing our bit and leading the World’. We need to restart our coal fired stations asap, a trip down the Rhine will reveal the Lignite fired stations which Germany is quite happy to build to replace Nuclear! No problem

      We have a huge community of deserving cases for aid in the UK, all of whom have done their best for GB PLC; it is called – the elderly!

      The way we are seeking to grab every last pound that we can from them to pay for necessary care is unbelievable. At least Dick Turpin wore a mask.

      It brings shame and dishonour to our politicians – but like water of a ducks back they care not.

      Scandalous!

    • Anonymous
      Posted May 18, 2017 at 2:46 pm | Permalink

      Bob – And absolutely no consideration given for the march of the robots. The automated car is almost upon us yet we are importing tens of thousands of Uber drivers every year.

      Uber won’t be paying their unemployment costs but will be charging us exactly the same fares for our taxis.

    • Leslie Singleton
      Posted May 18, 2017 at 3:32 pm | Permalink

      Dear Bob–Aiming to balance the budget by 2025 is my idea of a complete joke–Well down to the sort of baloney Corbyn spouts. What happened to “living within our means”?

      • Leslie Singleton
        Posted May 19, 2017 at 2:55 am | Permalink

        Postscript–I should have said “Stating that they they are aiming etc” because nobody but nobody, including the Government themselves, believes there is reality attached–as I am sure everyone does know bamboo is the longest grass and in to that’s where this has been kicked. Disgraceful and stupid–this, keeping debts down, is what we should be leading the World in instead of self-harm like Climate Change and Foreign Aid.

  11. Concerned
    Posted May 18, 2017 at 7:42 am | Permalink

    CNBC Headline May 18, 2017″War with North Korea could increase smartphone prices”
    What is going to become of us?

    • Denis Cooper
      Posted May 18, 2017 at 8:06 am | Permalink

      Even worse, smartphones might not work after nuclear war with North Korea.

      A whole generation will be at a loose end …

      • APL
        Posted May 18, 2017 at 2:18 pm | Permalink

        Denis Cooper: “A whole generation will be at a loose end …”

        At least they won’t be able to coordinate their riots.

  12. Prigger
    Posted May 18, 2017 at 8:02 am | Permalink

    Oil price boffins say prices will range between $45 to $60 per barrel for the next two years. We know they can be wrong. Their assessment is based on Saudi-Russian determination and agreement to steady output. They have just signed up to a 9-month agreement. There is belief the Fed’sYellen will rise interest rates which it is said will also deter US frackers from increasing production.
    Of course China to increase its usage at the same rate as now, this being likely. Other commodities,iron ore, corn, eggs, meat, for instance, are either declining in price or steady.
    There is a world-wide housing bubble not caused this time by sub-prime lending.
    How Mrs May will deal with the latter is frankly anyone’s guess. 300,000 net inward migration per year will solve our rented and owned housing problem according to the Labour Party as ever single one of them is a brickie. Also every single one of them moonlights as a nursie. Also every single one of them triples up as a carrot picker. Our economy runneth over….as in a car crash.

  13. Bert Young
    Posted May 18, 2017 at 8:03 am | Permalink

    For one reason or another the cost of living is rising and it is uncomfortable for all ; comparing us to other countries makes no difference .

    Today I looked forward to a Conservative Manifesto that would signal to industry and commerce that we are going to be an attractive country for them to be in and to do their business ; I have scratched around the news sources and found nothing to satisfy my wishes . Theresa is not going to bat as a Thatcher ; she has moved to the Left . I had big hopes for her ; now I feel disillusioned . Of course she will win and improve her majority but it is not on the back of policies that are truly Conservative ; she has no real opposition.

    Why Theresa has gone to bat this way is beyond me ; I have discussed this with one individual whom she previously consulted and he has come to the same conclusion – she has abandoned true Conservative values .

  14. Heady Times
    Posted May 18, 2017 at 8:18 am | Permalink

    The economy has never had it so good since the late PM Harold Macmillan’s time. I remember him on TV quite remarkably to everyone and with everyone’s nods “Let’s face it…we’ve never had it so good!”
    The media with their stick diagrams of exchange rates, FTSE100 up and down, plus the Bank of England’s monthly pouring on of cold water are living in a different UK to everyone else.
    The Labour Party’s “millions are starving” is a counting error by Diane Abacus

  15. Denis Cooper
    Posted May 18, 2017 at 8:23 am | Permalink

    As somebody who lived through years of double digit inflation I find it impossible to get excited about these small movements.

    The Chancellor’s target for the Bank of England monetary policy committee is CPI = 2.0% a year; it (or possibly now CPIH) is 2.7%; but the most recent exchange of open letters between the Chancellor and the Governor was prompted by it falling too low, straying below 1.0% last October:

    http://www.bankofengland.co.uk/monetarypolicy/Documents/pdf/chancellorletter151216.pdf

    “Inflation fell to 0.9 per cent in October, triggering an open letter for inflation falling more than 1 percentage point below the target. I agree with your assessment that falling commodity prices and the past appreciation of sterling explain most of the deviation from target.

    Inflation has since risen to 1.2 per cent in November. Your letter makes clear that the MPC expects inflation to rise above target later in 2017 and through 2018 owing primarily to import price pressures … ”

    Why so much fuss about it in the media and elsewhere? Perhaps because this seems to be the only prediction of economic damage which has proved even partially true and can be held up as demonstrating the utter folly of our vote to leave the EU.

  16. MickN
    Posted May 18, 2017 at 8:45 am | Permalink

    …..and of course the situation is even more absurd because we have a deficit. We are having to borrow north of 13 billion pounds a year to give away. Nobody would not go anywhere this sort of lunacy with their own personal finances
    and I still can’t get my head around a Conservative government thinking it is the right thing to do for the country

  17. A.Sedgwick
    Posted May 18, 2017 at 8:52 am | Permalink

    In 1970 I joined a multi national company on a salary of £2,500 p.a., which was a good income. It enabled us to buy a three bed room detached house in an outer London suburb for £10,100. Our council tax no longer in London has exceeded that gross income for several years. I know I will not live long enough to see this iniquitous tax replaced. It funds the ponzi local government pension scheme, over 6000 councillors and many duplicated activities through the myriad of councils throughout the country.

    Incidentally I was amused but not surprised to hear Sir Vince being unable to approximate the number of public employees, after all he was only Business Secretary for five years. I only knew after listening to a Radio 4 programme some months ago highlighting the public employee pension time bomb. For the record it is 5.4 million.

    • APL
      Posted May 18, 2017 at 9:54 pm | Permalink

      A.Sedgwick: “It funds the ponzi local government pension scheme, over 6000 councillors and many duplicated activities through the myriad of councils throughout the country.”

      During the last financial crisis, it was put about here that due to the resulting dire condition of the local authority pension fund, our council tax would have to go up.

      Naturally, the wage surfs were overjoyed at the prospect of keeping our ever increasing cast of ‘Lords and Masters’ in the manner they had decided appropriate.

      After all, as we were to learn some years later. We’re all in this together!

  18. acorn
    Posted May 18, 2017 at 8:56 am | Permalink

    On the High Street or the Web, it is difficult to find any retailer who isn’t heavily discounting everything! Margins are shrinking; fortunately, firms have been stashing the cash in the last few years by holding prices up while households were giving the credit brokers some profits.

    (ONS) The annual rate for factory gate price inflation was positive but unchanged at 3.6%, while the annual growth rate for [factory] input prices fell back to 16.6% from a peak of 19.9% in January 2017. Prices for imported materials and fuels rose 14.9% on the year and were lower than overall input costs for the third month in a row following a strengthening in the value of sterling over recent months. https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/producerpriceinflation/apr2017

    It will take a few quarters yet for the above to impact household.

    • acorn
      Posted May 18, 2017 at 5:28 pm | Permalink

      “Two sentences in the Conservative manifesto sum up the rejection of the pure laissez-faire doctrine Margaret Thatcher held so dear. “We do not believe in untrammelled free markets,” and “we reject the cult of selfish individualism”. May’s twofold message to the electorate is clear: the Tories are no longer the nasty party and she has something to offer wavering Labour voters.” (Guardian)

      Might as well shut down this site JR. El Presidente May has declared that your little band of Dinosaurus Torycus Nasticus, are not wanted on her voyage into the future.

      With luck, President May will be advised that the UK’s very large and unproductive casino financial sector, is sapping the resources available to the rest of the UK’s poorly performing goods production system. It’s the same in the USA. Google the following; you might learn something, ” Why Britain should not worry about Brexit-motivated bank relocations”

      Crikey; at this rate, I may vote for President May’s one party state.

  19. Stuff is big here!
    Posted May 18, 2017 at 8:57 am | Permalink

    Sky News 9.30am today says Theresa May will launch the Conservative Pary manifesto at 11.15am in West Yorkshire. Well, that cuts in down to the best part of a thousand square miles.

  20. Posted May 18, 2017 at 9:17 am | Permalink

    Much as one dislikes inflation, at the moment it is quite modest compared with some that we’ve had in the past. I remember when I had to pay about 17% on my mortgage due to the huge rise in the Bank Rate and Inflation!
    I think interest rates need to rise, it is no encouragement to save when the interest doesn’t even approach the inflation figure; I’m thinking of building an extension to our home, although we don’t need it, because the value of the investment will at least then rise with house prices.
    The main people who will cause a fuss if rates rise are those who borrowed the maximum amount possible at very low interest rates, but then in my view they should have allowed for the possibility of interest rises.
    As for wages, I can’t visualise that the low paid will get increases whilst there is a continuous stream of unskilled immigrants to fill these jobs (which is why, as a side issue, I can’t understand Labour’s immigration policy which is certainly not helping their main supporters!).

    • Leslie Singleton
      Posted May 19, 2017 at 3:00 am | Permalink

      Dear Pensioner–Immigrants ARE their main supporters now

  21. alan jutson
    Posted May 18, 2017 at 9:27 am | Permalink

    I see it is reported in some of today’s press that it is being proposed by the Conservative Party that all Home care will now be paid for by the recipient (not the State, Social Services or the NHS) if your whole estate is worth more than £100,000 (as house value is included).

    If the above will be the case, then it would seem social services has just been, to all intents and purposes, privatised for an awful lot of chosen people, most of whom I guess would be, or could be Conservative voters.

    Why does the Government hate prudence so much that it fails to practice it itself, or wish it for others.

    Thus another new service for people to pay for, which means much more cost for many families.

    No longer will the “means test” be just on income, but on total wealth, which will now include the house you live in.

    What test is there going to be about the difference between social care, mental or medical care at home.

    Please advise.

  22. Antisthenes
    Posted May 18, 2017 at 9:48 am | Permalink

    Left wing pundits chief among them is the BBC who are of course are peddling doom and despondency over the 2.7% inflation figure. The trend now is to manipulate all news good or bad to denigrate those who those presenting it do not like. A few decades ago decency and a belief in fair play would have refrained such behaviour. It appears our morals have now sunk so low that barriers to doing and saying what we like however deceitful and unethical have been removed. Pointing to the fact that our society is rapidly reaching a depth of depravity and excess that all failed societies reach just before their demise.

  23. Bryan Harris
    Posted May 18, 2017 at 11:04 am | Permalink

    With inflation so low and wages/income practically static for the last ten years, one has to wonder how all levels of government have the nerve to keep putting up prices/taxes, continually squeezing those that have least to give.

    Is it any wonder that so many people are at or below the poverty level when government is far from efficient and cutting out waste was a pipe dream.

  24. Know-dice
    Posted May 18, 2017 at 11:51 am | Permalink

    Oh dear 🙁

    Conservative manifesto – what a can of worms.

    She [Mrs May] is trying really hard to lose this election!!!

    Might have to NOT vote and I’m in the Wokingham constituency.

    • Mitchel
      Posted May 18, 2017 at 2:14 pm | Permalink

      The Edstone has turned up-minimised in Red Tess’s handbag!

    • alan jutson
      Posted May 18, 2017 at 3:36 pm | Permalink

      Know Dice

      Know exactly how you feel, I am also now having second thoughts, my wife simply would not believe me, saying she would never do that, until she read it herself.

      Afraid if the Conservative Party Candidates/Politicians go along with this, then their vote will absolutely plummet.

      John has not printed my two posts yet, (still in moderation)

    • Anonymous
      Posted May 18, 2017 at 5:40 pm | Permalink

      Ditto.

      Whichever way we turn is socialism.

    • Iain Gill
      Posted May 18, 2017 at 5:40 pm | Permalink

      Yes the blooming obvious is missing.

    • Narrow Shoulders
      Posted May 18, 2017 at 6:00 pm | Permalink

      @Knowdice – If you don’t vote make sure it is with a spoiled ballot. Not turning up can be construed as apathy, writing “None of the above” on your paper is registered.

      Every voter should register a ballot paper, if you don’t like the candidates/parties then spoil the paper

      • Know-dice
        Posted May 19, 2017 at 6:54 am | Permalink

        Many thanks – Good point, I will follow your advice 🙂

    • Iain Gill
      Posted May 18, 2017 at 7:06 pm | Permalink

      The sums on removing free meals from the youngest school children should be looked at. The state just spent a fortune installing kitchens and dining rooms, and having sunk that investment is now pushing lots of children back to packed lunches.
      Complete swings like this are bonkers.

      • Leslie Singleton
        Posted May 19, 2017 at 3:04 am | Permalink

        Dear Iain–Maybe, but the kitchens and dining rooms are a sunk investment

        • stred
          Posted May 19, 2017 at 7:25 am | Permalink

          Stranded asset is the current term for money chucked down the drain. Currently we have £4bn worth of useless smart meters, being heavily advertised and will need to be changed. The latest SA is the millions spent on the speed humps along main arterial roads, which will have to be removed in order to reduce the killer gas from half our cars, using wrong numbers to justify the ineffective policy. To say nothing of the scheme coming up to scrap half our cars and vans and make the UK a leader in electric cars, when we don’t have low carbon generation or batteries which have enough range.

  25. roadie
    Posted May 18, 2017 at 12:33 pm | Permalink

    The launch of the Tory manifesto in Halifax, West Yorkshire, went off well. Not the best place to show off your roadmap reading skills even with the additional use of a sat nav.

    • Anonymous
      Posted May 18, 2017 at 5:39 pm | Permalink

      Get rid of your assets while you can !

      • Bun
        Posted May 18, 2017 at 11:39 pm | Permalink

        Anonymous
        I don’t have any assets. It is said if I get severe dementia I will indeed have all my assets taken. How would I know? Would I care?
        My lack of assets will be an unpleasant surprise for the taxman and my relatives when I die. It will be what I wanted.

  26. APL
    Posted May 18, 2017 at 2:15 pm | Permalink

    JR: “UK inflation at 2.7% compared with plus 0.3% a year ago has risen almost identically to German inflation over the last year, implying the UK inflation is not to do with sterling or Brexit as some allege.”

    It’s called competitive devaluation, but you knew that anyway.

    In the short term, it’s seen as advantageous not to allow your trading partners to devalue faster than you yourself do.

    In the long term, it’ll destroy your economy.

  27. alan jutson
    Posted May 18, 2017 at 2:27 pm | Permalink

    Seems like the new Manifesto should read:

    “If you own your home, you are on your own”

    At least as far as any sort of “CARE” is concerned outside of an NHS Hospital.

    The prudent are stung yet again !!

    What sort of message does this give to people John

    Piss it all down the drain whilst you’ve got it, just like the Government.

    Yet new immigrants or those who have never paid in will not be charged !

    Shame on the Conservative Party.

    • Ken Moore
      Posted May 18, 2017 at 11:28 pm | Permalink

      I await with interest comrade Redwood’s response to the Marxist takeover of his party’s leadership ..as I feared Mrs May is even more left wing than David Cameron. Wtf is ‘intergenerational unfairness’?. Anyone ? Major… Blair…Cameron….now May..all ghastly nanny state creatures.

      It sent chills down my spine when Mr Hammond spoke of Mrs May’s ‘team’. JR – who is this ‘team’ ..I had this funny old fashioned idea that a PM’s team is her cabinet..

      One hopes that JR is holding his lip until the election is safely in the bag..

      • rose
        Posted May 19, 2017 at 9:48 am | Permalink

        And what is “burning injustice”? I should have said it was punishing the provident to reward the feckless.

        This state assessment of what someone’s house is worth while they are still living in it is extremeley ominous. It attacks the very heart of the property owning democracy and suggests more is to follow.

        Because the politicians have allowed the population to double in our lifetime and will probably oversee its quadrupling in our children’s, they will need either to billet people or to confiscate property. Even in the eighties, there were ministers who wanted to tax old people out of their houses, before they settled on the poll tax. Today, in Germany, property is being confiscated little by little: first from business and now from house owners, albeit empty houses at the moment, to house the illegal immigrants.

        This unequal treatment of patients with dementia is the thin end of a very nasty wedge.

        • Ken Moore
          Posted May 19, 2017 at 3:28 pm | Permalink

          It’s extremely nasty that May has her beady eye on your home.
          All in the interests of ‘fairness’ of course – as usual the spendthrifts get everything for free but work hard, save a little and your fair game. I wish I knew where JR stands on the modern religion of ‘fairness’ and ‘disadvantage’ ?

          What bothers me is that Dr Redwood’s party has just destroyed a major incentive to save – why save money when the state will just confiscate it.
          There is all of that ‘funny money’ floating around that the BOE created – when the baby boomers start to spend that’s when inflation will really take off. …Beware the law of unintended consequences.

        • Ken Moore
          Posted May 19, 2017 at 3:35 pm | Permalink

          ‘Burning injustices’…No idea either it sounds like May’s ‘team’ are indulging in some kind of student bar politics that could be extremely damaging. The idea that this team of politically correct big government control freaks are the people who are going to lead us to a meaningful withdrawal from the EU is laughable.

          Earth to Conservative party !
          I wonder what will be May’s Iraq war moment – like Blair she is deluded, does the whole God business , over confident and way out of her depth.

    • Know-dice
      Posted May 19, 2017 at 7:17 am | Permalink

      The PM has just alienated a large proportion of previous Conservative voters…unbelievable.

      Will be interesting to hear from Mr Redwood what his constituents tell him this weekend!!!

      JR – I will be out on Saturday morning but back in the afternoon (after 14:00) if you want to pop in for coffee 🙂

    • stred
      Posted May 19, 2017 at 8:14 am | Permalink

      A J. Just back from working in France and watched the news and first question of QT, then turned it off before cortisol levels went too high. Teresa doing her ‘strong and whatever’ with her team and telling us that the house grab, affecting almost every homeowner in England, was fair and sensible was enough to turn off the news. I noticed that David Davis was looking grim while listening. Perhaps he had done the sums and realised the latest blunder.

      Then Mz Patel on QT explained that we would be able to have care without having to sell our houses etc.. I wonder why these ministers seem to think that voters will not immediately work out that our main asset is now government loan collateral and that it will be grabbed shortly after they have granted probate. Perhaps they will bring back the £12-20k fee for this after withdrawing it before the election.

      The Treasury may have done their sums shrewdly. Dementia is increasing, especially in women, as we live longer and the numbers in houses worth over £100k will be very many. Perhaps they are counting on older voters already being too demented to notice, or preferring to take a chance rather than take out an insurance with a £75k limit, as previously suggested. I asked which other diseases are likely to require long term care and my expert tells me that some motor neurone patients and those with Parkinsons and MS are also likely to have their house sold after saying goodbye to their children, who will be unable to buy a studio for the £100k left over.

      Lots of spoiled ballot forms expected. It makes one wonder how many politicians have pre-dementia.

  28. Martin
    Posted May 18, 2017 at 2:37 pm | Permalink

    Inflation on the day that Mrs May converted to Heath minus Europe.

  29. Paul wills
    Posted May 18, 2017 at 2:37 pm | Permalink

    Mrs may says.. “Every vote for me is a vote to strengthen my hand in the forthcoming brexit talks”- but what a load of nonsense.. nobody in brussels is listening or paying one bit of attention- eventually the demand from EU side will be revealed – negotiations will be conducted in public for all to see..there will be a take it or leave it moment.. so then we’ll crash out..hope liam fox has some other trade deal options ready for us?

    • Denis Cooper
      Posted May 19, 2017 at 8:20 am | Permalink

      The good news is that defeatists like you will not be negotiating on our behalf.

  30. Denis Cooper
    Posted May 18, 2017 at 4:32 pm | Permalink

    Theresa May writes:

    “The next five years are the most challenging that Britain has faced in my lifetime.”

    Well, she’s 60, so I suppose that may just be true for her own lifetime. But it won’t be true for many of those who are not that much older than she is, including myself, and I don’t think it’s a good idea to exaggerate the challenges arising from Brexit.

    As far as just the economics are concerned, I think I prefer the view expressed by the charming lady on the right of the picture here:

    http://www.bbc.co.uk/iplayer/episode/b0837hb4/question-time-17112016

    that in a hundred years people will look back and say that UK made some minor changes to its trading arrangements with its next-door partners.

    (23 minutes into the video.)

    However I think that they will see the politics very differently, as much more important.

  31. pleb
    Posted May 18, 2017 at 4:43 pm | Permalink

    Treeza’s doing ok. Everyone comes to Waking Up slowly.
    Most people are too busy with everyday stuff to realise what’s going on.
    Hopefully any working class intelligentsia ( ie you JR ) in the Conservative Party are getting the message to her. She’s fairly old, not all that well and probably not fully awake so deserves massive support All policies are irrelevant.
    Full exit is the only thing she has to do.

  32. Wabbit (three legs)
    Posted May 18, 2017 at 5:04 pm | Permalink

    Awaiting further information on how taking away a guaranteed 2.5% annual increase in pensions and leaving the two “locks” of pensions rising inline with inflation or the rise in average earnings—whichever the higher, was worth tinkering about with in the manifesto.
    Inflation below 2.5%???? Don’t we have a very lucky country! Carrying that rabbit-foot keyring works after all.

    • Denis Cooper
      Posted May 19, 2017 at 8:12 am | Permalink

      CPI inflation has been below 2.5% a year for most of the past fourteen years, as shown on this chart:

      https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/d7g7/mm23

      As a rough estimate the cumulative surplus of 2.5% a year increases over the actual rate of CPI inflation would be about 5%.

      • Denis Cooper
        Posted May 19, 2017 at 11:10 am | Permalink

        A Labour party woman has just said on TV that the third part of the triple lock has benefited pensioners by £33o a year, which is a little over 5%.

  33. Iain Gill
    Posted May 18, 2017 at 5:39 pm | Permalink

    I will believe it is not going to go up when national savings starts selling inflation linked savings bonds again.

  34. John
    Posted May 18, 2017 at 9:19 pm | Permalink

    Sense and Sensibility

    • Leslie Singleton
      Posted May 19, 2017 at 6:42 pm | Permalink

      Jane Austen’s first published novel

  35. John
    Posted May 18, 2017 at 9:32 pm | Permalink

    I have the very great privilege of access to this free expert economic assessment that is this blog.

    Ordinarily it would cost a lot to have access to it on a fee paying basis. I appreciate this education and means to question the norm in the media and elsewhere.

    Thank you, much appreciated fella.

  36. anon
    Posted May 18, 2017 at 10:01 pm | Permalink

    Financial repression continues.

    The inflation tax will always exceed real interest rates in our current economic model. The BOE confirms it with its pre-brexit further easing and QE. The effect will flow through to price increases generally with a lag of 1-2 years.

    We have a lower sterling value , but until we exit are unable to buy at world prices.This benefit will only be felt when we exit the EU in about 2 years.

    So who benefits-you guessed the same old same old.

  37. Ed Mahony
    Posted May 18, 2017 at 10:43 pm | Permalink

    Just been looking at MPs with lowest expense claims, and saw that Mr John Redwood had the 4th lowest expense claim (2014/15).
    I’m not sucking up (i sometimes/often challenge his views on this site, mainly over the EU – i voted Remain). But credit where credit due ..
    (If this comment doesn’t get published for whatever reason, no worries).

  38. UKer
    Posted May 19, 2017 at 12:13 am | Permalink

    The Conservative Manifesto 2017 page 34
    “Scotland
    The Scottish Parliament has become the most powerful parliament of its kind in the world…”
    Not something to be proud about. Not something to boast about. The UK Government in Westminster in …Parliament… found that they should give powers to persons momentarily voted into a part of the United Kingdom who have no ethnic, lingusistic, or cultural separateness or identity from the rest of the United Kingdom….(more Scottish ancestors live in England than Scotland.)…on the basis of a minority vote withinScotland and no vote whatsoever to people in the rest of the United Kingdom for permission to give those powers to another none governing, none winning political party. It is a disgrace the Tory Manifesto writer had the audacity to chirp about it.
    We are having an unscheduled election because the numpties responsible for giving power to the SNP have thus weakened us all in the fight for our lives against the EU.
    The writer should be given a fair trial, found guilty, then sent to live on Puffin Island, with a couple of packets of vegetable seeds a reasonable knife for cutting out blocks of peat to make a habitation, two tins of pork luncheon meat and a toffee apple for dessert, plus a wad of chewing bacca for those cold winter nights and, wished Good Luck for the rest of his demented miserable life. As a last wish he can dress himself up as a serving maid and be rowed over to the island by someone dressed like Flora MacDonald. We are not animals.

  39. nigel seymour
    Posted May 19, 2017 at 11:52 am | Permalink

    J, Inflation is a fact of life around the world whether it’s def or inf. I have two CPI linked pensions and the only way these get uprated is directly through inflation so long may it continue. I am looking forward to September rate coming in at 2.5% – 3.5%.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

    Promoted by Fraser McFarland on behalf of John Redwood, both of 30 Rose Street Wokingham RG40 1XU

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