Fast inflation is damaging to jobs, activity, savings and the conduct of economic policy. Hyperinflation, inflation above 50% a month, destroys an economy completely, making normal economic activity for wages and money receipts near impossible. Venezuela hasĀ hyperinflation thanks to printing and borrowing too much, and nationalising and price controlling much of what is left of Venezuelans of industry. Maybe incomes and output have halved as a result. It is difficult to measure their economy with the daily surges in prices. Argentina has inflation of 55% and is trying another IMF programme to get it down a bit. Turkey has allowed 70% inflation by expanding money and state borrowing too much. These are the warnings to advanced countries not to let inflation rise further and embed.
The main advanced countries led by the USA with inflation at 8.4% and the EU with inflation at 7.4% have inflation at similar levels to the UK for similar reasons. The US and the EU printed huge quantities of dollars and Euros throughoutĀ 2021 triggering first an asset price bubble and then upwards pressure on goods.Ā It is true all have suffered from a sharp rise in energy and food prices, in part owing to the Russian invasion of Ukraine. This however, has also been experienced in China and Japan which have inflation rates of around just 2%. China pursued a tougher monetary policy. Japan always gets away with massive money printing and borrowing probably owing to the cautious consumers who avoid excess demand. Switzerland, another large energy importer, has also kept inflation under control.
The UK authorities started to rein in their monetary excess late last year. We are now living through the inflation based on last years excess. Owing to price controls on energy the full effects on inflation were delayed until April and maybe also until the autumn when there will be another catch up increase. This year’s tightening should mean a sharp decline in inflation next year as the Bank is now forecasting. The European central Bank is still printingĀ more Euros and keeping interestĀ rates at zero. So they are still risking continued high inflation. Maybe they hope the evidence of slowdown and possible recession will be sufficient to lower the price rises.
There are several lessons the UK authorities need to learn from these experiences. The first is you cannot carry on printing and borrowing when you are well into recovery. The asset inflation is likely to spill over into goods and services. The second is imposing price controls on an essential like energy does not protect people from inflation in energy prices for more than a few months. The price rises catch up with you. It also means more losses to be absorbed by taxpayers on the businesses that go bust and need rescuing as a result of the price controls. The government should drop this approach. In the short term government is the great Ā winner from inflation. Its revenues go up as prices and wages go up. The real cost of repaying most of its debt go down as savers are swindled out of the realĀ value of their savings.
May 19, 2022
Good morning.
I loathe money printing. And on both the scale and time period high inflation always going to happen. The government has borrowed and spent too much and it is now using inflation as a means to keep those spinning plates (government spending) going. It need to rake in and get a grip on various departments and projects, telling them that, there will be no more money if costs go higher.
We are experiencing this due to the fact that we have a government that cannot manage the nation’s finances. As I stated before, Mayor Khan raised his charges by a whopping 8%. I find it strange that Labour want windfall taxes and price caps on private companies but are strangely quiet when it comes to the public sector and its excesses and waste. Time to put a price freeze on all these government bodies of no more than 2% with saving to be made through efficiency and job cuts.
After all, as a former PM once said, “We’re all ‘in it’ together”, and by in it I mean the brown smelly stuff.
May 19, 2022
Massive deregulation, kill the net zero lunacy, halve the size of the largely parasitic state, cut taxes, stop blocking the roads, get fracking, stop printing money, stop wasting money almost everywhere, cancel HS2, cancel the soft loans for worthless degrees, MOTās every three years is fine, cancel Sunak’s vast tax & NI grabsā¦ it is all obvious and quite simple but alas we have a socialist, green crap, regulate to death government/Chancellor and PM. Not remotely a Conservative one. Dishonest too – they claim to be cutting taxes while increasing then and claim more wind and solar will lower energy costs (they do the reverse) and that fracking will not lower gas costs. Plus we have the huge manifesto ratting on the triple lock and their vast tax & NI increases. Only ~ two years to the next election.
May 19, 2022
Lifelogic :
I agree completely.
I think the Government should cut Civil Servantsā pay and pensions just as Ireland did in 2009/2010 as a result of the financial crisis.
May 19, 2022
We read BOE staff attend one day a week while its leader is on Ā£575,000!
May 19, 2022
Well summed up. A 100 upticks for you.
May 21, 2022
I think we need to be careful of over-focusing on economic policy (although important of course). The success of a country is far more down to cultural values than economic ones. Cultural values such as work ethic, sense of personal responsibility, spirit of entrepreneurship, and so on. But even so, let’s look at some of your claims pragmatically so as to avoid falling into ideology (nor am I saying let’s be complacent but I think need to be careful of using words such as ‘socialist’ / ‘regulate to death’ etc. Lastly, I believe taxation should be down to 20% but you can only achieve that through hard-fought transformation in cultural values not economic-policy tricks – economic policy is only effective to a certain degree, long-term:
DEREGULATION.
According to 2019 Economic Freedom of the World Index, UK is more deregulated than USA, Canada, Netherlands, Denmark, Luxembourg, Sweden, Finland, Germany, Norway, South Korea, Japan, Austria and Belgium.
TAXES.
The following countries are taxed higher than UK: Germany, Iceland, Netherlands, Sweden, Denmark, Austria, Japan and Finland.
Although I certainly agree with some of your points. Most of all: cancel HS2, worthless degrees, get fracking,
May 21, 2022
And I say all this also so that we don’t lurch too far into a political direction that alienates the middle-ground vote (but I don’t just say it because of votes – but also for the reasons given in my previous comment).
May 21, 2022
The cultural values I talk about could be revived to a degree through bringing back National Service. This would teach young men the importance of self-discipline, self-reliance and patriotism. Just getting up early and making bed is a benefit. And National Service is also a lot of fun (I loved the CCF at school). National Service maybe for 6 months or 3.
Also, be great to see the government doing what it can to help entrepreneurs and companies in general in High Tech to turn UK into Europe’s Silicon Valley. And that we create more great high tech brands, exporting abroad. All the high skills and high wages and high productivity involved is so great for the economy.
May 19, 2022
Do you think we will ever see the words :’competent financial management’ and ‘Boris Johnson’ in the same sentence….
May 19, 2022
‘Boris Johnson lacks competent financial management, as does his present Chancellor’ is one possibility.
May 19, 2022
Peter Wood
You will be walking on water if that ever happens.
May 19, 2022
Sunak seems to be trying his best to destroy the parties reputation for “relative to Labour” economic competence. Just as John Major did with this ERM fiasco giving Blair a 179-seat majority.
He has also destroyed there reputation for keeping to their manifesto promises – so no one will believe a word they say next time. Sunak’s manifesto ratting on the triple lock & his vast tax grabs were totally unnecessary and a huge error politically as is net zero and the expensive unreliable energy agenda.
As JR puts it he cannot afford not to cut taxes and do so now. Only two years to the next election.
May 19, 2022
I thought ‘financial management’ was the treasuries job?
The chancellor and the PM (Joint No 10/HMT Economic Unit) 2021 had 2 workers on grade 4 (Ā£96,000-Ā£145,000), 1 on grade 3 (Ā£73000-Ā£102,000), and 3 on grade 2 (Ā£57000-Ā£80,000). The Chancellor then has another two spads one grade 2 (Ā£57000-Ā£80,000) and one grade 1 (Ā£40,500-Ā£60,500). Then there will be a team of Civil Servants advising this department.
May 19, 2022
competent … Johnson.? really?
May 19, 2022
Public sector unions agitating for 1% pay increases. That can not help inflation in the short term.
RMT striking for greater pay during the Platinum Jubilee weekend when their pay levels (and the hours worked) are already generous.
Public sector setting the tone for private needs.
May 19, 2022
Generous in the extreme.
May 19, 2022
The RMT seem to think they don’t have to work bank holidays, this is just weak management. The politicians want us out of personal transport and onto public transport – they have got to be kidding with this bunch of workers. Who wants to rely on a load of work-shys? One of my children doesn’t run a car because he lives in London he is inconvenienced on all major occasions this year, he nearly missed his grandads funeral, train just cancelled no notice, he nearly missed another ‘celebration of life funeral’ on the last bank holiday weekend. Holiday plans have been scuppered and he had to hire a car just to get to the airport. Train just cancelled on the West Coast mainline on a weekend he had to go to a wedding in Glasgow – extortionate price and long route plus delays to fix this problem.
May 19, 2022
This Cassandra has long said governments live with inflation to cancel their debts. So do influential young men at the Treasury who have huge mortgages to cancel. Furthermore, all these interested agents are index linked in their salaries and pensions, which is why inflation is such a difficult dragon to slay. The public sector stokes inflation because it sees itself as immune from inflation, but when inflation is far advanced, it isn’t, and then it can’t stop it.
May 19, 2022
+1
May 19, 2022
rose – looking at the spads list to the treasury in 2021 it seems the top spads and most influential are men, the people with girls’ names seem to be on the lowest grade and there are only 2 of them unless Cass is also female (probably as this person is only grade 2).
Living in London perhaps they don’t have the problem with fuel price inflation, smaller apartment living doesn’t create as many problems when home energy prices rise unless they’re now working from home and the offset of travel costs pays for any extra energy use.
May 19, 2022
Rose, absolutely on the button.
May 19, 2022
Mark,
First sentence second paragraph sums it up. Same sentiment from Shirley yesterday. This party and govt are squarely to blame. A succession of policy failures that rests with Johnson and JR and colleagues allowing to be a big state tax and waste PM. His chaotic private life brought into govt ie wallpaper beyond his means getting his party to illegally pay for it then got caught. Same flagrant abuse for lock down laws that He introduced. Highest debt, deficit, taxation, inflation, worse disposable income etc etc.
Who appointed the BOE governor! Who is ultimately in charge of civil service, Treasury and BOE?
Now idiot Johnson looks like he is going to sign WHO treaty- is that taking back control! Truss trotting out the same threats of legislation last yearā¦. Who signed the NIP?
I canāt wait for 2024, we cannot afford these looney tunes in govt for another month let alone two years.
Sunakās first and second budget were good socialist budgets claimed former Tory ministers. The same sort of ministers Cameron would prefer to sideline in preference to former Labour ministers! The first budget before Johnsonās covid lockdown.
May 19, 2022
Well I would not mind printing a bit for myself to clear off my business loans but in essence you are just stealing money of millions of other savers (and thus reducing these debts). That is why the government do it – taxation or theft without the need for budgets or legislation. Essentially the same as taking a bit of gold of the edges of everyones gold coins āclippingā. Also it harms the economy by distorting incentives and making people do thinks that would not otherwise be sensible.
But far simpler for governments to do now with just the click of a mouse. Totally immoral but then so is manifesto ratting, taxation at the current absurdly high levels and the endless waste Boris and tax to death Sunak.
May 19, 2022
The diverging fortunes of east and west are very reminiscent of what happened in the Roman Empire after the Emperor Constantine moved the capital to Constantinople and converted the empire to christianity-he also rebased the currency to the super-pure gold solidus,using gold confiscated from the wealthy pagan temples of the east with ongoing increases in the money supply coming from the imperial gold mines which were located exclusively in the east.When the empire was divided into two dynastically-linked administrative parts (and as they became estranged), the west suffered from the lack of gold to pay for imports and a shrinking fiscal base as tax concessions were offered on the land handed over to barbarian military commanders in lieu of pay.The later western emperors were reduced to demanding bronze roof fittings from their shrinking population for conversion into coinage before the collapsing west became de-monetised.
May 19, 2022
Broadly I agree, Mark.
It isn’t just the printing, it’s the means of introducing it to the economy, which means that assets, notably in residential property, experience the greatest inflation.
The egregious price of accommodation in the UK is the root of most of our problems.
People’s struggles to pay it mean that they will not accept the tax payments that other countries use to finance a more civic country, for instance.
May 19, 2022
It hardly bears thinking about, but for people currently in their 30s and 40s who cannot afford to buy houses their situation will probably not change by the time they reach pension age. Average rents in the UK are presently approaching Ā£1000 per month which is considerably more than the state pension.
May 19, 2022
Cost inflation in three syllables H S TWO
May 19, 2022
Good morning
When Tory MPs embrace the intellectual bankruptcy of Keynesian ideology for an easy life then you know it’s game over for the UK. Inflation is a direct result of Keynesian pump priming
Maybe instead of supporting debt financed State spending to maintain the political status quo they should, if they genuinely care about such matters which I doubt, support systemic reform of the entire State apparatus that is slowly repositioning itself as an embedded parasite to feed off the private sector host
May 19, 2022
Iād suggest this government has gone beyond Keynesian ideology and adopted command economics, state intervention and social engineeringā¦.with a tax policy akin to the Sheriff of Nottingham
May 19, 2022
Dom, what % of GDP do you think is genuine ‘private sector’ now?
Not counting things that are ex-public sector none profit-making (just there to pay the payroll cost/pension) organisations that used to be under the council umbrella and often have the same public sector type contracts such as Housing Associations, care homes that only have public sector supported patients.
May 19, 2022
Allister Heath is surely right today:- Elite groupthink is driving Britain into a nightmare of inflation, idleness and rage. We face a calamity even worse than the financial crisis, thanks to the hubris of our failed ruling class.
May 19, 2022
1300 comments to Allister’s article and the vast majority are supportive of his excoriating remarks.
Most voted Conservative or consider themselves to be conservatives and held their noses in order to Get Brexit Done.
What they got was Authoritarian, Socialist Green-lunacy. Wonder how many will vote to be CONNED again?
May 19, 2022
A fear i have at the moment is that the leaders of The Tory party are now jaded (Brexit, Covid, Putin and now Inflation), and might want to lose the next election in a couple of years so as to take a break and regroup. That would be terrible as Labour would get into power. So does the Cabinet have the stomach to go back into a long, drawn out battle again with the EU? I think we need to be careful about the pressure we put on the current leaders of The Tory party as we could find out, and I might be wrong, that they’ve just had enough – and need a break.
RePly The Conservative leadership has no wish to lose the election.The EU has brought down the NI Assembly by its actions.
May 19, 2022
The responsibility of government must be:
1) Deal with Putin (he’s still dangerous)
2) Deal with / or react to, inflation, rather as best as possible.
3) To manage to get through all this well, well enough to win the next election so as not to allow Labour / Lib Dems in.
Dealing with Brexit is important but it’s not as important as points 1 to 3 at the moment. And if we’re not careful, we could end up with another EU Referendum (via a Labour / Lib Dem gov) and get drawn back into the EU – or something similar to being a member of it – and stuck in it again for years.
Reply Getting inflation down needs us to use Brexit freedoms
May 19, 2022
Alistair Heath in the Daily Telegraph shreds elite group think sparing no one from the Governor to Politicians across the spectrum to people with lots of letters after their names who assume that gives legitimacy to their views.
No one could have predicted Covid but Ollie the Octopus would have known the vast amounts of money printed would have fed through into inflation.
Thatcher was a grocers daughter having to work on a budget and an exceptional Chancellor in Nigel Lawson. Now We have Bullendon Boris, from a rich as Croesus family sending to Eton and latterly thinks the money for Ā£750 a roll wallpaper comes out of thin air and the world is run on BS and Sunak , immensely talented but a boy in terms of experience.
No parties senior management teams are fit for purpose.
May 19, 2022
“No one could have predicted Covid” Well we did have a pandemic planning team and plans so it was to a degree certainly predictable and predicted. Absurdly we went into a mad extended lockdown (contrary to the plan) which was a disaster. This rather than sticking to a more sensible Barrington declaration agenda.
May 19, 2022
The UK has long experience from other nations’ historical inflationary plight as well as its own, yet repeats the same mistakes.
Price is a beautifully efficient mechanism, enabling the collective wisdom of billions of individuals to assess, decide and control what is worth buying, and shunning that which is not. In contrast, daft Govts use authority to borrow excessively and spend recklessly into spirals of worthlessness at votersā expense.
Govts would be accountable if Treasury employees were paid and charged according to the lasting value of their results. Fines would be fine with many voters, plus VAT, plus inflation.
May 19, 2022
Bloke
There’s the accountable word again..
They just about will be able to spell it but they as sure as hell do not understand the real meaning of the word.
I was once told by my manager that lack of accountability is the bedrock for waste.
May 19, 2022
+1 but most would deserve and get no pay or negative pay.
May 19, 2022
Price may be a beautifully efficient mechanism and people can decide whether to buy or not. However when it is abused and covers essential items like oil and gas which are essentials and must be bought regardless of price and a global and unofficial anti competitive elite decide to just charge whatever they like, unhindered in any way and don’t even pass on tax decreases as in the case of road fuel in the UK, that theory goes out of the window.
May 19, 2022
The (non-central) banks are still able to print money whenever they issue a loan. This is a practice that should be curtailed.
May 19, 2022
Sir J, A good explanation of the current situation and repudiation of the “We can’t control inflation. it’s international” line.
You could go on to say that given our current position higher (much higher) base rates are needed. This will likely cause a recession. A recession is not always a bad thing. For too long the low base rates have allowed zombie companies to survive. Better to let them to fail and give space for new, better companies to follow.
May 19, 2022
So unnecessary. The pivotal moment was that stupid chucking of cash and telling 20 30 40 year olds not to work. Also test and trace, PPE and the hopeless black-hole NHS. All totally avoidable by sensible thinking in the non-Corporal Jones mode.
They just don’t deserve to be in charge.
May 19, 2022
I find it strange, Sir John, that every time you take up the theme of inflation you seemingly try to reassure your readers with the BoE’s forecast of a ‘sharp decline’ in inflation next year. Yet every forecast made by the BoE recently has been wrong, as you yourself have pointed out.
May 19, 2022
And anyway even after a sharp drop in the future rate of inflation, whatever high inflation we are presently having will have moved the prices higher up. Which means that the future possibly low rate will apply to these higher prices. And do not expect pensions or even salaries to compensate for the present inflation.
All the above is rather obvious, but announcing a future sharp drop is just a politicianās way to (try to) make himself āpopularā.
May 19, 2022
Is it so obvious?
Prices do rise and prices also fall.
There isn’t a ratchet effect.
May 19, 2022
What we are experiencing isn’t a failure or incompetence; it’s deliberate. The Covid hysteria and lockdowns; blowing up the economy; the resulting inflation; and the accompanying climate propaganda: we are experiencing The Great Reset ….. planned by the WEF and which is now being implemented across the western world.
The British Institutions won’t learn any lessons, because it is all going to the WEF plan.
Meanwhile, it is reported that Prince Charles – the future Monarch who is supposed to remain above politics – is out in Canada having discussions with Trudeau about “sustainable finance in combating climate change and building a Net Zero economy” ……. again pushing the objectives of The Great Reset.
1. I hadn’t realised Charles had studied economics and is a financial expert.
2. I obviously missed the reports about Charles gaining a qualification of any kind in Climatology – or much else, come to that
3. And this morning, Charles did a voice-over on a “Charity” advert bleating on yet again about climate change and demanding that “the peasants” cough up to combat it
Perhaps he doesn’t realise that the Net Zero project is deeply political and he is interfering in contentious issues which do not have any democratic legitimacy. The role of Constitutional Monarch in the UK requires that he stays out of politics.
Is Charles planning to remove himself from the line of succession? Or is the Government going to enforce the Constitution?
May 19, 2022
I want to see the government stop using the word ‘recovery’. It seems that we have been in, or pursuing, ‘recovery’ for nearly a decade and a half – and that the government uses that need for ‘recovery’ to do all manner of dumb things hindering progress towards normality. Next week’s rant will be about the ‘vulnerable’, any two of whom could easily rake in Ā£40K/year and live reasonably comfortable lives in most parts of the UK.
May 19, 2022
Let us spare a moment to commend our German chums (who all recall the Weimar experience) for their present fortitude in the face of a 7.4 per cent. inflation rate in April, a record high since reunification.
(Obviously, do not mention the Deutschmark. Happy days!)
May 19, 2022
O/T.
Please enlighten us John on why we are running CCGT plants to export power to Holland and France.
How does this fit in with the governments net zero rubbish when we can burn the hated fossil fuel to support foreign governments.
Something doesn’t add up.
May 19, 2022
BTW after a few good days of windmills we are back down to 3gw and dropping.
What’s going to fill this shortfall in 2 years when theist of coal and most of nuclear have vanished.
May 19, 2022
Ian, an article in the Mail suggests that LNG is arriving in large quantities as Europe does not have enough facilities for accepting it and we do not have enough storage so it has to be used at a cheap rate. It’s the old story of supply and demand which our present government does not seem to understand.
May 19, 2022
It’s happening because the continent has limited LNG import capacity. The UK has spare LNG import capacity particularly now we are out of winter. Some of that is being used to fill the gas export pipelines from Bacton, but that capacity is small and full up. By running our CCGT capacity when our electricity demand is low, we convert gas to exported electricity, reducing the need for the continent to run their own gas power stations, effectively exporting more gas.
The benefit is that we are getting lower gas and electricity prices while these conditions persist. The weekly average power price was below Ā£90/MWh last week for the first time since last summer. The news that National Grid wanted to slow our gas imports risks that we will no longer benefit in this way. The more time we get with this mode the less bills will have to go up in the autumn. Next winter will still be a massive problem though, with capacity shortages.
May 19, 2022
Boris and his yes-men are doing a fine job of ruining the UK and making us totally dependent on imports from hostile countries, in preparation for … (we haven’t been told yet!).
Democracy has been side lined, yet again. Elected on a set of promises that never materialised, and no believable explanations from the government. The excuse ‘we can’t afford it’ has worn very thin, when other nations of the UK get benefits not afforded to the English, and billions are spent on non-essentials such as HS2, illegal immigration, foreign aid, international NHS, etc.
May 19, 2022
Thereās nowt like inflation
For screwing a nation
Donāt tell us they didnāt know!
Just look at history
Itās not a mystery
They planned this a long time ago!!
May 19, 2022
Sighā¦** its
May 19, 2022
Noā¦that was right.
Too early!!
May 19, 2022
Good piece. Itās rather depressing that this Conservative government keeps reaching for known failed left-wing āsolutionsā such as price controls rather than know successful policies such as enabling competition. The latest news is we hear the Labour campaign for an energy windfall tax is cutting through. The minimal amount it would raise is being āspentā by leftist speakers many times over. The damage to future investment prospects is never discussed. Of course itās a popular idea in focus groups – so would be a bank holiday every Friday. That doesnāt make it a good idea.
I know itās not all their fault as the govt signs off on QE, but it feels like there should be radical change at the Bank of England, at least on the MPC. The MPC seems to be infected by SAGE-style groupthink. There is not nearly enough criticism of the disastrous lockdown policy which sage trumpeted and which the govt finally screwed up the courage to overrule. Unelected officials with real power must be held to account for failure.
May 19, 2022
+1
May 19, 2022
The ‘windfall’ tax is said to be able to bring in about 2 billion, whereas the big oil and gas companies have raked in 40 billion this year alone in excess profits due to rip off pricing, so I don’t know where the idea that only 2 billion can be raised comes from – even Labour say that, surely a lack of ambition.
Regarding competition, there isn’t any, except among small traders such as the local builder or the butchers shop. Big companies run unofficial cartels as evidenced by the mega profits being filched from the poorest in order to give managers multi million salaries and bonuses.
May 19, 2022
Oil companies work around the globe, so most of their profits are earned elsewhere. Not really ours to tax. If we do, then we will end up paying higher prices for more imports.
May 19, 2022
Also worth pointing out that we benefit from dividends and capital distributions paid to our pension funds. There have been enough tax raids on pensions already without adding more.
May 19, 2022
There doesn’t need to be a raid on pensions, this is money additional and they could still get a good return as usual. Also, pensions are long term and it may help pensioners in the long term, but current pensioners are hurting badly right now and some of this rip off money could go towards helping them and the poorest in society. I know Tories don’t generally care about things like this and like to keep their corporate pals in clover so they won’t do it yet, but they will, eventually.
May 19, 2022
You seem to be forgetting the rip off prices in the UK right now at the pumps and on heating oil. Prices are much higher than the average over recent years and were being charged long before any gas or oil shortages and when oil prices were much higher than today. You are probably right as to the amount the politicians say can be taken, except maybe for British gas, do they sell overseas? However, even 2 billion would help and send a signal that they must not rip off the public. If the government just give away tax money without clawing it from the oil and gas companies then they are just subsidising the companies and encouraging them in their current abuse of the public.
May 19, 2022
The biggest winner in the fuel price rise is the UK exchequerā¦Iād like to know what theyāve been doing or plan to do with all the extra billions tax revenue on petrol & diesel
May 19, 2022
Government Departments?? Mark, you miss the main criminal. We have a spendthrift person in Johnson.
The picture in my mind is of him in a clown suit dancing down the road throwing pound notes over his shoulder and them scattering in the wind.
May 19, 2022
I always find it funny that a favourite mantra of those in public life is ālessons have been learnedā. This is rarely the case. We have known for centuries that printing money results in inflation. Recently, the Left have maintained that this view is āold fashionedā as though that makes it wrong. Of course, this is a stupid view and the inflation we now suffer was entirely predictable. Earlier this year I spoke to a financial adviser who works for a major high street bank. I wanted to invest my pitiful savings rather than leave it in an interest bearing account. During our discussion I sail I was worried about runaway inflation. He said the BOE said it would be temporary then settle down to 2%. I said I though a 2 might be there somewhere but my worry was that it would be in front of a 0. Letās see whoās closest!
May 19, 2022
Either, what we are witnessing, is total incompetence – or the wilful and deliberate destruction of the economy.
Can it really be incompetence and bad choices? On this scale?
May 19, 2022
+1 Sharon – Nobody can be that stupid, especially not when they have an army of ‘advisers’. It has to be deliberate.
May 19, 2022
Sharon
What further proof is needed to highlight the lack of joined up thinking and total unsuitability of the vast numbers who supposedly represent us at Westminster? All the parties have got to have a soul searching deep rooted audit into what has been allowed to be passed on a nod and a wink.
The leaders and central offices have got to rethink where the ethos of their parties actually sit in this so called modern world. Political dogma and the past achievements count for nothing because at the moment Westminster is totally unfit for purpose.
May 19, 2022
Deliberate destruction as is the net zero lunacy. Driven by vested interests and corruption.
May 19, 2022
Many are wondering this, Sharon; or is it that the Davos world is being shoe-horned into a new paradigm of their collective liking?
Either way, we should sound the alarm on the potential NWO power grab about to be imposed upon us, courtesy of the WHO. Isn’t this where it all started, back in 2019-20? I haven’t seen an old bank note since!
May 19, 2022
Sharon – this is the question of our time, the really big issue. Are they just incompetent clots, or is there a real plan to ruin our economy and way of life? I was always a supporter of alternative A, but I’m beginning to move over to B. I still don’t see the point, though. A ruined economy, a bitter nation, who gains from that? Rich people are rich already.
May 19, 2022
Based on the BoE past history on forcasts how can we believe what they say . Mark Carney was a disaster and Andrew Bailey is a disaster waiting to happen.
The government should look at the MPC’s role and ask how it got it so wrong. Some of these people are supposed to be top economists. I think group think is the root problem for some of these people.
May 19, 2022
Inflation has three causes, which tens of thousands of people have posted millions of comments saying they could see this coming.
– Net Zero energy policies pushing the price up
-Globalism causing supply chains to be out of control and imbalances between demand and supply.
– Lockdown causing huge debts and money printing with zero benefits
May 19, 2022
Net Zero means the super/rich and oligarchs get to fly around in private jets and the rest have to turn their central heating down in winter to pay for it.
Same with taxes, wages and profits.
The strategy is that in order to create huge wealth imbalances you need to create an under class that you can control and suppress from complaining. This is not a Conservative strategy of wealth creation and aspiration but a strategy of centralised authoritarianism and a planned economy.
May 19, 2022
+1
May 19, 2022
Excellent comment by Alistair Heath in the Telegraph. The anger is palpable.
Why is it that real conservatives such as Sir J, seem to have so little input or ability to sway the inexperienced magic money tree economists/ finance/ civil servants that we have.
As Alistair Heath says currency debasement destroys civilisations.
May 19, 2022
Meanwhile, it’s reported that the Prime Minister has already signed the new WHO Pandemic “Accord” ….. not a new Treaty since Biden knew he couldn’t get it approved by Congress, something which obviously doesn’t concern Johnson.
So he’s transferred British authority to manage a future pandemic to the unaccountable Public Health Grandees of the WHO, with no democratic mandate to do so.
My response to any future restrictions imposed by the WHO will be to ask the basic democratic questions “WHO the xxxx are you to order me about, and HOW do I remove you?
May 19, 2022
Well said.
May 19, 2022
+1
If that turns out to be the case we can dispense with all this economic worrying.
I give it a few months at most and we will be imprisoned again. Never mind inflation!
Maybe thatās why the political class feel it has no consequences to face?
May 19, 2022
**feels
Oh dear!
Has he really done that??
Total disaster.
May 19, 2022
You might be imprisoned Everhopeful but I will be ignoring any silly actions ordered, just like Neil Oliver said he would do in his show on GBNews at the weekend.
We must not allow that fiasco to get off the ground ever again!
May 19, 2022
I doubt the public will wear it again and that there will be civil disobedience on a grand scale. There will be consequences to face.
May 19, 2022
Your last sentence says it all ā if you donāt know whoās enacting & implementing laws and you donāt have the power to remove them; then sovereignty is lost, independence is lost, democracy is lost
May 19, 2022
+1
And soon to lose bodily autonomy!
May 19, 2022
Donna. Agree with your post. The WHO didn’t see fit to stop China letting flight after flight out of Wohan even when they knew there was a problem. They helped China cover it up. Why tge hell woukd we trust them?
May 19, 2022
+1
May 19, 2022
Years of QE, 2 years of lockdown, Brexit, greenism, re-wilding, a war started by NATO (USA) in Ukraine all leads to … wild inflation. D’uh ! Who’da thunk it ?
Two BofE economists walk into a bar (near their WFH locations.) You’d think one of them would have seen it. (to quote.)
May 19, 2022
“UK must accept border on Irish Sea is inevitable, says ex-WTO chief Pascal Lamy says row is solvable if PM stops using emotional Brexit politics to solve ātechnical problem”, Excellent summary from a guy who knows more about WTO border disputes than anyone else.
https://www.theguardian.com/politics/2022/may/18/uk-has-to-accept-border-irish-sea-inevitable-ex-wto-chief-pascal-lamy-brexit-boris-johnson
May 19, 2022
Ukrainian soldiers are being encouraged by bullshitting Washington and the two-faced grifters the EU to fight and die to protect their nation’s sovereignty and borders. Meanwhile, the UK is targeted by the same snakes in their plan to take apart a nation that brought so much to the world
Heath has so much to answer for
May 19, 2022
Indeed
May 19, 2022
Has he ever been elected by any citizens of any country?
Or is he just another lefty technocrat telling others what to do.
May 19, 2022
Possibly Lamy has something to say that is worth hearing but it is not said in that Guardian article. I resent expending time read it for it offers nothing that reveals the promised WTO expertise of Lamy, rather only bold and broad assertions that suit the Evil Empire position.
May 19, 2022
An interesting read is how going Green has damaged Sri Lanka and how if we follow suit we will experience food shortages. The Sri Lanka president decided to go organic and their tea crop, one of their key exports, has dropped 40% along with a great reduction in other crop yields. They canāt afford to pay for their oil and gas imports so supplies are not being landed. Now people are rioting in the streets and burning down politicians’ houses, destabilising the country.
The human population has risen so much in the last fifty years that 40% rely on high crop yields produced by using fertiliser. Thatās about 4 billion people.
We now see Russia targeting the export of food from Ukraine, the breadbasket of Europe. We see India banning the export of wheat. More countries will try to protect their food sources.
The production of fertiliser has been reduced due to high energy costs and shortages of potash and nitrogen. This has vastly inflated the price. Our farmers are being paid to re-wild their land. The Green zealots want to stop the production of meat, another key source of fertiliser.
We need our Government to urgently look into the future and reverse the damage they themselves are creating:
1) Stop re-wilding
2) Increase fertiliser production
3) Create more gas and oil storage
4) Stop building houses on productive farmland
5) Encourage more livestock production which in turn produces more fertiliser
6) Stop increasing the countryās population
And finally
7) Stock up on tea bags
We can live without most things but food isnāt one of them.
May 19, 2022
A lesson to everyone and every government, especially your bullet point (7)
May 19, 2022
@ Christine
I would add an eighth policy that might be necessary for Britain- a full return to the Gold Standard. Fiat currency is actually quite dangerous- it always runs the risk of Money-traders short-selling the currency. We see that with how British Poud Sterling has dropped recently- short-selling on the Markets increases (imported) Inflation.
May 19, 2022
Maybe we should be growing wheat instead of maize for animal feed.
May 19, 2022
I don’t like borrowing. For individuals it is fair in the pursuit of the buying of a house, and in business for investment in greater or new production. Both these must have strict repayment systems and credit controls must be tightened.
The same disciplines must apply to governments but no longer do and this is the biggest problem. Waste and fantasies are out of control. People are paying as a result but have no means of punishing the leaders, recent ones being of the worst. They are in an elite group wholly out of touch with ordinary people.
The position we are in as a nation, that is bankrupt, must be addressed and higher taxes must be paid but the lower earners ought to be excluded at present however by increasing the earning tax exemption significantly.
There is too much hysterical talk in the media and by politicians of cost of living problems. They have picked up ’emergency’ and ‘crisis’ words from the other places it is used, but the promotion that vast numbers of people are going hungry and living in serious poverty and without heat is disgraceful.
Inflation will fall and be helped with people being more economical. It will be useful if it gets people out of the idea that everything should be available at all times.
In case you wonder I live in a small two bedroomed house and my income as a pensioner is around Ā£28,000 pa. I have just ordered heating oil which will cost me more double I paid last year at this time.
May 19, 2022
The economic ‘gurus’ say that inflation is caused when too much money chases too few goods. I’d say that is bunkum. I don’t know anybody who has too much money sloshing around in their bank account or who can’t buy everyday things they require because of lack of availability. Of course a recession is coming and is being stoked up by the government. When you leave people with too little money, guess what – they don’t spend on things that can be avoided and even essentials such as food and heating are cut back. A recession is baked in and seems to be welcomed by this government of shysters, intent on ruining the country and getting us back under the control of the EU even if we don’t fully join up again (which I think we will due to the many EU fanatics in high places). Economics is smoke and mirrors, not science.
May 19, 2022
Britain’s capacity to produce its own DELICIOUS and healthy fruit and veg is vastly under-utilised.
I think the best way to start to tap into this is start a CULTURAL TREND of people doing this in their own backyard gardens.
Government should use its contacts in TV and media to do fun / interesting programmes based on people growing their own fruit and veg in their own gardens. Start a trend:
Benefits:
1) People save a lot of money
2) People can improve the quality of fruit and veg they eat by controlling their own production of it
3) It’s hugely fun and satisfying doing it (there’s a famous quote in Tolstoy’s War and Peace, think, where it says that one of the greatest joys in life for a man is to have his own garden patch to grow own fruit and veg).
4) I think a garden full of fruit and veg is more natural and attractive-looking, especially, when food getting more scarce in the world, than exotic flowers (which I like but I prefer to look at in Kew Gardens, somewhere like that).
May 19, 2022
Here are 6 of the most cost effective UK veg for one to grow in one’s garden. And really healthy:
1) Kale 2) Tomatoes 3) Lettuce 4) Broccoli 5) Asparagus 6) Potatoes
Really delicious fruit the grow really well in UK:
1) Strawberries 2) Raspberries 3) Blueberries 4) Figs 5) Apples 6) Blackberries
May 19, 2022
don’t forget (7) rhubarb crumble (home grown & home made)
May 20, 2022
Yes ..
Also, there are so many other little things, that when add up, make a big difference.
For example, be great if we could also turn honey-making back into a CULTURAL NORM. I think we import Ā£100 million of honey per year. Why can’t we produce that here. Again, politicians could use their friends / contacts in TV / Media to create programmes based around / encouraging British honey-making and to support British honey-makers by eating more British honey. And based around this, we could also increase delicious (and healthy) foods that include honey. As well as lots of other things that contain honey.
Also, why are we importing a Ā£1/3 of a billion worth of ice-cream in the UK? Again, be great if we could get our politicians to use their friends / contacts in TV / Media to do fun / interesting programmes encouraging more people in the UK to go into ice-creaming making using our DELICIOUS British Milk / Cream (and so helping farmers and economy in general). There’s no doubt, the Italians make the best ice-cream. Be great if we could get some Brits to go over to Italy and learn how to make the best ice-cream possible and then make it back here with our delicious milk / cream (better than Italian milk and cream, I think!).
And the High Quality Chocolates (I believe we important lots). And so on (why not make more of our own?)
May 20, 2022
Not saying easy to achieve all this. Don’t want to over-idealise. But TV / Media can do a good job in changing cultural norms through fun / interesting TV programmes (documentaries / competitions etc). And politicians need to use their friends / contacts in TV / Media here. Good start at least. Appealing to people’s sense of imagination (and patriotism).
May 19, 2022
Also, eating well, saves a lot of money and much better for your health. Because real hunger (i.e. hunger for nutrients that you need) as opposed to fake hunger (i.e. hunger for sugar / carbs that quickly turn to sugar) requires healthy eating. So for example, a big bowl of delicious porridge in the morning is full of nutrients and so fills you up and same for brown rice (instead of pasta). Porridge and brown relatively cheap and very healthy. We need to encourage more people to eat food like this than all the sh*t I so often people putting into their shopping trolleys. Lastly, eating badly / lazily is bad for your mental health too not just physical health and so bad for productivity as well and huge extra burden to NHS. Now a great opportunity to try and get far more people to eat more healthily and save money.
May 19, 2022
Dear Sir John Redwood
Now that Britain has Inflation of 9.0%- and rising- there is now a real risk of a Wage-Price Spiral pushing Inflation ever higher. Yet millions of folk have fallen on especially hard times and this country may already have entered Recession. This is full-on Stagflation and it threatens the Conservative Government’s policies of massive investment in the North of England and tax-cuts for all to help the Economy grow. Interest rates will need to be raised to 3% or more to curtail such Inflation- adding another Ā£80 billion annually on to National Debt Servicing costs alone. Only Economicly-damaging Tax Cuts and/ or Voter-ailenating Public Service cuts would suffice to stop debt getting out of control to pay that down! Both would reduce Tax-revenues making for a vicious circle of Austerity, massive hardship and this would lead to such a landslide Conservative Electoral Defeat in 2024 that the Conservative Party may be out of power for over ten years!
Another (radical) set of solutions is required to stop the Economic rot: First, Britain must be put back on the Gold Standard with the Government bonds on the Bank of England’s balance sheet sold (at a rate of Ā£50 billion annually) with the proceeds used to buy up Gold to back up the currency. The British Pound Sterling is then tied to the price of Gold. That will help cure Inflation.
Secondly, money should be printed at a rate of 4% of GDP a year to buy Gold Bullion and Gold shares from Gold Companies in Britain. This new money (unlike Quantitative Easing) will be backed up by the Gold it has bought and will be much less inflationary as a result. The increase in the Money Supply at 4% a year will help Britain avoid recession and increased Tax revenues resulting from the growth generated must be used to pare down VAT and Income Tax (making it cheaper for businesses to make and sell goods). Both these measures together will help foster economic growth and further help reduce Inflation. The Bank of England would, as a result, be less inclined to jack up Interest Rates and debt-servicing costs will not require Voter-repelling Austerity to service. Additional revenues would then enable the funding of Government manifesto policies, such as Levelling Up.
Do share this Gold-buying with money-printing Policy with your Conservative colleagues- and with the Treasury: Both the UK Economy and Conservative Electoral hopes may really depend on it!
Ian Pennell
May 19, 2022
Mr. Redwood, I read today that energy prices rises in France have been capped at 4%. Is this true and, if it is, how can the French government do this while your government looks on uselessly and makes insulting suggestions.
Reply France has a majority of its electricity from nuclear stations. Ours comes from burning gas.
May 20, 2022
And EDF is owned by the French State.
May 20, 2022
Surely you canāt mean ānationalisedā.