The UKās monetary policy is far less expansionary than the US, with growth at half the US rate adjusted for the size of the economies.The fiscal stance in the U.K. is far tighter than the US who have just announced a monster $1.9tn spend and borrow programme on top of all the previous pandemic measures. If any country is going to have an inflation problem from their response to the pandemic it will be the USA.
The U.K. has offered a larger public spending and borrowing boost than most European countries and has accelerated its money growth in line with the ECB. Our inflation rate according to official forecasts will rise a bit but will stay anchored near the 2% target. Others think it could get a bit livelier than that.
Given that we do need stimulus to fuel recovery, and given that an early return to austerity deficit control could make the deficit worse, the U.K. does need to finance an expansion. Given the global inflationary pressures likely to break out the best response for the U.K. is to expand domestic capacity rapidly to avoid shortages and undue price hikes in popular areas. We need more domestic capacity in everything from electricity to timber, from food to broadband to cut the risks from present monetary and fiscal policy.
Public spending support to replace lost incomes and business hit by the lock down was necessary. As we move out of lockdown this public spending should drop away as income and turnover returns to people and business back at work. Going forward spending on good quality public services is needed, but not wasteful spending.
March 15, 2021
Good Morning,
Our PM simply doesn’t seem to understand what the country does and does not need.
We don’t need expensive rail projects, we DO need nationwide fast internet service.
We don’t need a bridge or tunnel to NI, we DO need to have sufficient national electricity production, for all our new electric cars and, to eliminate dependence on EU power.
We don’t need a space port or space ships, We DO need to produce a lot more of what we eat and use in our households.
We don’t need so much government spending we DO need a lot less government regulation to let free enterprise work.
and so on. If you can get the dreamers in No. 10 to focus a bit on the important issues we’d all be better off.
March 15, 2021
Agreed, in a nutshell…
March 15, 2021
You should have a read of Bloomberg of another Brexit consequence. “Brexit Hands Traders a Lucrative Way to Play Power Markets”. For about a decade, U.K. prices for whole-day and hourly power contracts have been settled jointly through auctions on Nord Pool Spot AS in Oslo and Paris-based Epex Spot SE. That co-operation ended after the Brexit transition period. Nord Pool now settles its daily prices about 30 minutes before Epex.
Traders āare happy to try and use the new arrangements to their advantage,ā said Phil Hewitt, a director at energy consultancy Enappsys Ltd. āGetting a good spread between the two auctions is good if you call it right, you can book healthy profits in 30 minutes.ā.
Naturally the extra cost will be paid by the UK consumer. A question to the Minister and OFGEM perhaps JR?
March 15, 2021
The problem is that the politicians get carried away with the big legacy projects they also
fail to understand that just saying something makes it happen – when will the voters ever learn.
March 15, 2021
Peter Wood
Get the dreamers in No 10 to focus.
No Peter just get them out of there before they do any mote damage.
Everywhere you look waste,waste and more waste
March 15, 2021
Good post Peter
March 15, 2021
It’s far easier to build a bridge to our main export market, the Continent, than it is to NI.
Let’s do that – the Chinese built one much longer for less than half the money that the Tories have given away for test and trace that made no difference.
And the usual way to prevent inflation is to have sane interest rates. It might be painful for some, but that’s what is generally done.
March 15, 2021
+1
March 15, 2021
And Boris is going to stop further drilling for oil in the North Sea to burnish his Green credentials with the Green mob gathering in Glasgow later this year, that goes along with his attempt to block a coal mine needed for steel production, and this morning he is doling out Ā£3bn to build traffic blocking bus lanes, and convert buses to electricity and hydrogen that we don’t have. He is socialising our freedom to move about the country.
March 15, 2021
And you don’t understand that it’s not a case of either/or. These things are not mutually exclusive. Of course we need more electricity production (what the hell is the delay in committing to Rolls-Royce’s SMRs???) but we also need spaceports, to help boost our satellite industry, where we have a lot of potential for growth. And yes, of course we need to produce a lot more of what we eat and use in our homes, but to do that we need more government investment and state aid to boost industry and farming.
March 15, 2021
Seconded.
March 15, 2021
Peter
It is being reported (BBC Website) that the EU are taking legal action against the UK for breaking the Northern Ireland protocols.
Time to withhold some of the money we are due to pay them I think until this is resolved with a proper workable agreement, clearly what seemed to be an agreement has turned out to be a misinterpretation by either one, or both sides.
Time for Frost and Barnier to resolve it, or at least clarify the situation so that it is workable or withdrawn.
March 15, 2021
Any PM should have sufficient understanding of the electorate ‘s views to not make such mistakes.
The fanfare for Johnson went into a bungled croak pretty quickly, didn’t it?
Even worse he makes bigger judgement errors as time goes on.
One shambles Government after another.
March 16, 2021
Dear Sir John,
Ā«Going forward spending on good quality public services is needed, but not wasteful spending.Ā»
Thinking of Dido Harding’s “Test-and-Trace”, I presume…
Yours truly,
Fernando Ferreira
March 16, 2021
Peter Wood, Unfortunately the BEIS “Updated Energy and Emissions Projections 2019” (the latest) shows final electricity demand to rise only slightly from just under 40 Mtoe (Million tonnes of Oil equivalent) in 2020, to 40 Mtoe in 2040. So essentially the government is planning no extra capacity for the full electrification of car transport and the part electrification of homes.
March 15, 2021
You circle this safe piece of speculation like a wasp round a jam pot when there are much greater pressing problems stacking up for more urgent action.
We have a police force becoming more disfunctional by the day.
The question of mining coal in the Workington area for steel production in South Wales kicked into the long grass in fear of a bunch of woke greens whose popularity is so great they produce only one MP in a national election. You blather on about increasing home production knowing full well that the coal for steel will have to be imported. Workinton cannot exist on platitudes.
Then there is the irregular trade warfare against UK exports to the EU. It is disrupting fishing in our own waters. It is divisive of the UK in the normal domestic flow of trade with NI. It is hitting normal exporting to EU countries through a guerilla form of paperwork warfare. Your government has totally misread the attitude of the EU to trade after we left and is now in navel scratching mode when more direct action is required. We can do without Mercedes Benz and BMW cars for the time it takes the EU to come to its senses prodded by those same companies.
The nuances of inflation and the manipulation of the economy are relevant, but they are the long game. Start taking an interest in what is going on in the kitchen.
March 15, 2021
I judge that my submission this morning is like many others you do not like. Well go on ignoring the opinions of the electorate if that is how you prefer to run things but do not be surprised in three years time when we once more have our say. Hiding behind your rules of moderation is no excuse as most seem to ignore them anyway.
March 15, 2021
That ‘monster’ expansion of US State spending you so innocuously reference is not designed to support the US economy. Its primary purpose is the creation and construction of a brutal, authoritarian client state that will destroy the liberties and freedoms of every US citizen and destroy anyone who dares to oppose it.
This ‘monster’ expansion of State spending will destroy democracy and civil liberties.
Mr Redwood presents his ideas on the premise that more State involvement is a positive. For a supporter of free markets and economic libertarianism and the ideas of Hayek I find that worrying since it reveals a change in mindset.
Anyone who follows human history will note that when a political State takes more than is necessary from those it rules over it becomes more an oppressor rather than a defender of liberty. That is the situation we face today in the west.
Mr Redwood’s continual focus on all matters economic and financial to the exclusion of all else reveals a mindset that is also prevalent throughout his party. It is a political culture of a party whose primary purpose is the avoidance of the most contentious issues of the day that have the potential to stoke an activist response and damaging headlines. This desire to avoid such issues has led us to this point in which the very nature of our world is at risk
Your party’s refusal to confront (indeed your party has actively become involved, behind closed doors obviously) the poison of the progressive, authoritarian left will destroy our civil nation and leave us exposed to barbarity and expulsion.
March 15, 2021
Biden, with his ill-judged stimulus, has presented an open-goal to the GOP for the mid-terms – but the decentralised nature of the party means that it will probably miss the opportunity. I am sick and tired of politicians, around the West, who now seem united in their inability to do anything other than tax and spend – badly. Boris needs a stiff talking to next time he appears in front of the backbenchers.
March 15, 2021
I am sick and tired of politicians, around the West, who now seem united in their inability to do anything other than tax and spend
Tax, spend and curtail liberties and choice.
March 15, 2021
Yes, I once had a choice of thirty countries in which I could live as an equal with their peoples, with no special procedures required.
Taken from me by the Tories and their niggardly following.
March 15, 2021
As an equal? Not strictly true, of course, but, nonetheless, you were a bit slow there, matey.
March 15, 2021
I’m tempted to say ‘Yawn!’ but I’ll resist. Of late, there’s been some coverage of the plight of ex-pats in Spain . To gain residence, the Spaniards are demanding that the ex-pats are solvent (Ā£2000/month + Ā£500/month per dependant) and gain a Spanish driving licence. So, no great drama. I’m guessing that you could find plenty of places in the EU to move to if you had a mind to.
March 16, 2021
But still prefer Cardiff ?
March 16, 2021
Martin, Did you ever ask the natives of those countries whether they actually wanted you to live there? Or are you too selfish to bother with what the natives think? At the Referendum, we decided that no, we did not want uncontrolled immigration imposed on our country, and therefore we should not impose ourselves on those other countries.
March 15, 2021
Agree
Government handbook is coloured red
March 15, 2021
Sea Warrior
Stiff talking to.
I think a lot of people would agree but not talk, he doesn’t listen. A stiff rod might be better employed.
March 15, 2021
Sleepy Joe,s handlers are typical tax, spend and waste lefties.
The stimulus will cause inflation which will reduce the deficit at the expense of savers.
Typical commie thinking to remove peoples assets and the state takes control.
Standby for another financial crisis with Harris and Clinton in the driving seat.
March 15, 2021
One way to avoid inflation is to have a very high unemployment rate, so the government have achieved that.
In the financial press I am reading anecdotal evidence that price increases are rapid for some commodities due to supply chain pinch points caused by industries that haven’t got back up to capacity after Covid. One example was in cardboard for packaging, another was in stainless steel. Your suggestion of bringing back supply chains into UK is good but is plainly counter to the policy of a government that would prefer to continue importing coking coal from Canada rather than produce it in UK.
March 15, 2021
We wonāt avoid inflation. We have just erected significant trade barriers with our biggest and nearest trading partner – and we can already see the impact this has had on prices for those goods we can still buy.
Incidentally, I read an interesting report from Spain about lots of elderly British expats (migrants) being forced back to the U.K. by masses of new Brexit bureaucracy.
Spanish authorities are carrying out checks and arranging for those now living there illegally to be deported. It is shocking how many of them donāt integrate into Spanish society. Preferring to live in their own enclaves, not learning the language – and so on. Still, for many of them it is dreams ruined.
March 15, 2021
The problem is being hugely overblown. They can apply for permanent residency if they like, just as some 4m EU citizens have without trouble here. Just a bit of form filling and maybe a few Ā£100s of cost.
March 15, 2021
āA bit of form filling.ā Delivered by the people who promised to cut red tape. The reality is that it has massively affected many peopleās lives, ruined their dreams and take away their rights.
But you donāt care because itās all about you. Pathetic. Letās hope we remove something you value – and then sneer at you too.
March 15, 2021
Note the word “value”. Your enthusiasm for the EU is basically an enthusiasm for European culture, which you insist we should share. But we don’t, do we, so why is that?
It is because Europe had its last chance at establishing its global relevance by smoothly managing de-colonialisation and the rise of the Third World in the 20th century – something the UK notably succeeded in doing – and instead it tore itself apart in two World wars.
It may recover, but today Europe is the embers of a burned-out culture, which is much more interested in trying to legislate a total benefits and regulatory system that it can’t afford than in doing anything positive. Basically a museum of itself.
Brexit is just a way of ensuring that they can’t take us down with them.
March 15, 2021
@Andy; You really do not have much of a first clue. Even before Brexit there was much form filling to obtain your Spanish documents of Residence (and as friends found out recently, even more should you wish to de-registrar, when selling property to return to the UK!), whilst it was quite possible to ‘wing it’ without such documents such people have always had problems should they come under scrutiny of officials such as the revenue and customs or Guardia Civil. Nor is this state of affairs limited the British.
March 15, 2021
Do you care one jot about those Brits, in the UK, who can’t find affordable housing?
March 15, 2021
You canāt take it can you. You canāt simply argue the case on the facts.
It is a simple matter to apply for permanent residency if you want to spend more than 90 days in 180. Just as many EU citizens have done here.
The red tape of course has all been created by the EU. The U.K. would have been happy to proceed without any of it.
March 16, 2021
Andy: “āA bit of form filling.ā Delivered by the people who promised to cut red tape.”
Your complaint might be warranted if it were directed at this government, but since these people live in a foreign jurisdiction, they should expect to comply with foreign laws.
If Spanish laws have changed since they moved there, well, they better figure out what they need to do to comply with the new laws.
March 15, 2021
Exactly right Richard. If you have a permanent residence there why wouldn’t you? We lived in Spain for 5 years and we’re officially residents and experienced no problems.
March 15, 2021
+1 to much of that. It is rude to live somewhere and not bother to speak the language.
March 15, 2021
@Andy; The EU might be our nearest but it is not our biggest trading partner/customer, the RotW is and has always been. As for imports and inflation, distance is not the inflationary issue but dockside price, after all shipping cheaper products from China has kept inflation low for some three decades now, as would shipping cheaper (and higher quality) products from the USA or Australia for example.
March 15, 2021
Andy,if only we had a vaccine against the rubbish you stream every day. Before Covid there were an estimated 2 million illegals living in the UK. Nothing suggests that this figure has gone down, probably the opposite.
Brits in Spain, most legally, can if they choose, obtain a Residencia Permanente, a spanish driving licence, an EASA pilots licence,and register with the Hacienda to pay their taxes in Spain. This brings them into line with Spaniards. Not unreasonable I would submitt, unlike the shambles in the UK that allows 2 million operate free to do as they wish.
I do not find it shocking that they avoid learning spanish, many have the same attitude to english, but they miss out on an uplifting experience that goes way beyond the sun and sangria. You stay at home Brits could learn much from the spanish attitude to PC and a police force that visibly serves its people. Hasta la vista Andy, pero usted es bienvenido visitar el pais del sol.
March 15, 2021
” (Spanish) Authorities are carrying out checks and arranging for those now living there illegally to be deported. It is shocking how many of them donāt integrate into (Spanish) society. Preferring to live in their own enclaves, not learning the language ā and so on. ”
If anyone else wrote this about ethnic communities in this country Andy – you’d be accusing them of racism
March 15, 2021
Slight difference Andy- The English who went to live in Spain went and lived on their own finances. Either opening businesses if young or living on their own money if pensioners. They did NOT turn up in Spain in the back of a lorry and jump out expecting – and getting – to be supplied with a house, free money, free healthcare etc. Unlike those who arrive here, then instantly demand better – even going as far as to burning places down to get moved to a better ( taxpayer funded of course ) life.
Our newly arrived “replacements” have absolutely NO condern or respect for this country, it’s laws – or us.
March 15, 2021
For once I agree with Andy. If you are living in another country long term you should make an effort to learn the language. No expectation that official documentation will be translated into forty different languages.
March 15, 2021
Not like it is here. Actually they don’t provide interpretor. In Spain we had to provide our own until we learnt enough of the language to manage. That was easier once we started mixing with the Spanish.
March 15, 2021
Not like in the UK then …?
March 15, 2021
They do speak the language. Europe is fast becoming an English-speaking continent. That is exactly why the French are trying to resist the trend.
March 15, 2021
Andy
” It is shocking how many of them donāt integrate into Spanish society. Preferring to live in their own enclaves, not learning the language ā and so on.”
Yes, I have to agree with you entirely on this. Personally I think living in another country but not making the effort to learn and use their language is absolutely arrogant. Perhaps they think they’re superior to people of their host country.
When in Rome, as they say.
March 15, 2021
Andy.
Level playing field please.
What about all the immigrants we take on who never learn our language and customs. We roll over backwards for them.
The cost to you and us taxpayers is a blooÄy joke. In Spain if you needed a interpreter you paid for one. If not you got three fifths of naff all out of there system or you paid to see private doctors and solicitors who could speak English
March 16, 2021
Andy, We won’t avoid inflation primarily because of QE. If you had been right about the impact of Brexit then it would have tended to produce deflation due to the Brexit economic doom you predicted. But then none of your predictions have come true, have they?
March 15, 2021
I think you should take a personal interest in hydrogen as a fuel. There is little sign that HMG are in its case, seeming to put all its efforts into batteries. Yes for storage but Toyota, Siemans and others are on the hydrogen case for propulsion. Massively expand off shore wind capacity by fast tracking manufacturing capacity both for the turbines and battery storage. Energy used to power the grid but importantly create green hydrogen. Get Jenrick off his backside to fast track planning. The U.K. is best situated because of its island situation.
The Times reports manufacturing is at a high owing to domestic demand. More wind generation would bring energy costs down further, reduce reliance on the inter connector. Rethink the Corporation Tax increase it will work against what you are proposing.
March 15, 2021
The Houdini of elements, odourless, invisible, explosive over a wide range of dilutions. What could possibly go wrong?
JF
March 15, 2021
Any compressed, or potential, energy source has the potential to go wrong. Ever seen a petrol powered car go on fire. Or the water behind a dam. Or a battery overheat. Hydrogen is the same as any other source of energy, you have to take care.
March 15, 2021
Hydrogen is not really a āfuelā, there are no hydrogen mines. It is an expensive & very energy inefficient method of storing energy that has been produced some other way. Wind energy to electricity to hydrogen to combustion in a car to motion is an absurdly expensive and wasteful system.
March 15, 2021
Given the huge amounts of clean, renewable energy available to us, the fact that:
is neither here nor there. It is clean and renewable. And need not be expensive.
March 16, 2021
If you think this will ānot be expensiveā with current technology you simply have not done your homework.
March 15, 2021
In a use it, or lose it , it makes sense. Especially if we build at scale to 100GW.
Most hydrogen currently comes from natural gas. So there is the direct CO2 saving. Hydrogen could be injected direct into the gas grid or made into CH4.
March 16, 2021
Anon, Hydrogen cannot be used in the existing methane grid due to “hydrogen embrittlement” of steels.
March 15, 2021
Yes Nig 1, government inertia is depressing. Perhaps the hydrogen lobby are failing to offer enough well paid synecures to MPs.
March 15, 2021
Hydrogen, Batteries, EVs, E-Fuel are all solutions to problems that don’t exist
There’s nothing wrong with the internal combustion engine (ICE) using petrol or diesel
Millions will be using the ICE for hundreds of years in China, India and Russia when we’re back to using the bicycle
March 15, 2021
Oops! A rare slip from the normal high standards on this site.
But the question is clear. A return to 2% to 3% inflation would be helpful. The current extremely low interest rates are distorting capital allocation.
The critical issue is to ensure that it doesnāt zoom past that target to the 5% level, let alone beyond. That is difficult because of the haziness and delays in data on what current inflation is, the uncertainty around the impacts and lags of policy measures, and the likelihood of āeventsā destroying assumptions about what would happen without policy intervention.
Three questions arise. How much inflation is desirable at any time? How to control inflation to achieve that dynamic target? To the extent that policies require increased public sector spending, and borrowing, how to ensure that the money is well spent, and not just frittered on inefficiency, vanity projects, electoral bribery, and white elephants.
March 15, 2021
GilesB,
A return to 2% to 3% inflation would be helpful It is not clear that this is true. The research indicating 1-3% growth optimum inflation for developed countries and higher for developing countries is some years old. For developed countries the lower end of the 1-3% band is appearing more optimum in terms of real GDP per capita growth; it may even be closer to zero. The propaganda argument of slightly falling price level is not well founded. (Japan is usually touted as an example but its real GDP per capita has been doing OK). As well as slowing growth, higher inflation generally comes with regressive effects (both in income and wealth terms). If the Govt cares about growth and those that it has thrown under the bus this past year, then in no way should inflation be allowed above 2%, and even this target is currently questionably high. If the Govt wishes to continue its regressive transfer of wealth and income policies then that would be a different objective.
low interest rates are distorting capital allocation Yes, as is this Govt and the Conservative Party’s obsession in aiding people to buy their own prisons.
March 15, 2021
Good morning.
I have never trusted the official inflation figures. They do not take into account Council Tax rises, which are always above whatever the inflation rate is or, fuel costs. If these real world costs were included I am sure it would be much higher causing the BoE to consider raising interest rates. Of course this would be good for savers, not so good for borrowers, and disastrous for those dealing in stocks and shares. And can’t have that. So the poor and the middle classes will get poorer and the rich will get richer.
From 2008 all UK governments have failed to plan and bring down debt. They have continued with their Keynesian interventionist ways believing that, much like the Generals of WW1, ‘One final push / stimulus’ will do the trick. Mrs. T did it differently, and it worked ! We have a comparison, which is why so many here are concerned with what the hell is going on. It is as if you people have collective amnesia.
Get out of the way. Stop taxing and over-regulating. Why do we have a government QUANGO that demands that business tell them if said business have information on other business and ask them to pay a fee for doing so ? Madness and jobs for the boys and girls.
March 15, 2021
The figures don’t take into account the cost of real property, the main expense for many people.
We know why – the rate would often be staggering of they did.
March 15, 2021
Mark B
“It is as if you people have collective amnesia.”
No, they just answer to someone else. We’re just mugs enough to give them office.
March 15, 2021
The housing market will lead to inflation in the UK. Put stamp duty back to where it was and remove help to buy to quell demand.
I understand that our government doesn’t want the housing market to collapse but it needs a few years of low growth to bring it back in line with historic norms.
Increasing interest rates to historic rates will encourage savers to keep their money in the bank rather than spending their holiday and commuting savings from the past year. I am looking at different places to put my money to safeguard against inflation as bank accounts provide no assurance.
March 15, 2021
What on earth would be the point of that? And please donāt say it would encourage banks to lend. Banks donāt need customer deposits to lend money.
March 15, 2021
Saved money is not inflationary Mike – the post today is about curbing inflation.
March 15, 2021
A classic answer I guess from an oldie that has got a nice house etc and whatās more with worries about savings and even in that respect very old fashioned. Historically savings accounts have rarely matched inflation and over the medium/long term equities have always done better.
Maybe you should get out of your bubbie and think about how young people get on the ladder.
March 15, 2021
I rent Nig and would like to own but as my savings grow so do the house prices.
Decent saving rates would increase my savings and realistic rates of interest would crop house price inflation as repayments would increase. I think I am more in line with youngster than you might imagine.
March 15, 2021
Looking at the US stimulus itās clear it has far more to do with buying votes for the Democrats in next years mid term elections than covid recovery economics, which doesnāt need this size of stimulus. It just needs re-opening of the economy. In the US the (republican) light lockdown states have been much less impacted economically than the heavy lockdown (mostly democrat) states (but have not had worse covid outcomes). Entrepreneurs are leaving economic disaster areas like California in droves to go to states like Texas and Florida, which are well governed. Biden is trying to tip the balance back.
We donāt want any of that kind of corrupt, wasteful nonsense here.
March 15, 2021
The USA economy is about to go mad. There will be very high inflation and interest rates will have to be jacked up. Savers will be happy. There will be a massive round of home repossessions as mortgage rates rise.
March 15, 2021
“The USA economy is about to go mad.”
Biden will screw up, and I shall laugh.
March 15, 2021
How can it not go mad? Biden is about to give people in the States free money. It will be SPENT! Pronto!
March 15, 2021
” There will be a massive round of home repossessions as mortgage rates rise.”
No, most home mortgages in the US are fixed interest. The rate only rises for new loans. Most repossessions in the US are due to over-leveraged buyers and lost jobs.
March 15, 2021
Except we do not need to “avoid inflation”, we need to avoid excessive inflation, and we most certainly do not want to strangle our recovery for fear of inflation, because such a cure will be far worse, further economic stagnation.
March 15, 2021
Several surveys show business confidence at its highest level since 2015. (2 months into Brexit thatās not bad, and another nail in the coffin of project fear). Its good news, but it shows we just need to take advantage of the success of the UKās independent vaccine rollout and get opened up. Then we need to help our neighbours and other countries, as there can only be real recovery once the whole world is free of the Chinese CCP virus.
March 16, 2021
It’s very difficult to help our neighbours when they keep refusing the AZ jab.
March 15, 2021
Amazingly many economic history buffs can find positives in pandemics.
They point to how The Black Death brought about more āequalityā, higher wages ( until inflation hit),the freeing up of land, businesses and property ( ready to be grabbed) and technical innovations.
Strangely similar to ideas of the economic reset!.
Pre Covid the economy was in trouble just as it was pre Black Death. In both cases economic ruin was accelerated. In the BD at least due to a massive death toll, not govt intervention.
Donāt think any dodgy money was printed for BD though.
(Counterfeiting and coin clipping carried the death sentence).
Avoid inflation by not pandering to the unions? No labour shortage here… at the mo anyway! Quite the reverse.
March 15, 2021
Good Morning, Sir John,
More than anything the country needs to get back to the old normal, and people need to work.
Please could you explain when you have time why the Coronavirus Act has to be extended for another six months from March 25th.
I see I’ve been wasting my time informing people of the petition ‘Repeal the Coronavirus Act’.
Yours,
a very despondent Mary M.
March 15, 2021
Huge public spending is but thing that will affect inflation.
For a start some controls should be established on utility companies, insurance companies, ETC …and councils…. EVERY SINGLE YEAR WE SEE INCREASES WELL BEYOND THE INFLATION RATE – None of which are justified. The British public is tired of this annual ripoff
With so much public money being thrown in every direction at the moment, (except mine), that needs to be balanced by not spending public money on things we do not need, like HS2 and huge central government. NOW is the time to reduce staffing levels in Westminster, trim the budgets of quangos and indeed remove more unnecessary quangos.
It is well past time we started to run on Thatcher economics.
One other thing long overdue is a total revamp of our taxation system. Long since promised, but not delivered and now the most oppressive in the world.
March 15, 2021
Sir, you ask “How can we avoid inflation?”. A good start would be to arrange that real inflation personally affects all MPs, goverment bodies and state employees in similar proportion to the way it affects other people, especially pensioners. Correspondence received this month tells me that, from next month, the price charged to me for Council Tax and various utilities, e.g. electricity and telephone-broadband, will rise by rates far in excess of the official rate of inflation, e.g. Council Tax up 4.6%, electricity up over 10%. My pension increase is a fraction of that. So is the official rate of inflation. If the charges for utilities were the same proportion of MPs’ pay as it is of, say, the average working wage, it would be a strong incentive to restrain inflationary increases or to compensate everyone by the same monetary amount for failing to do so.
March 15, 2021
To take control of inflation is easy.
Do not waste time, energy and resources on things that are outwith your full control. No pandering to certain sectors to try and keep them in line or supportive.
The government has full control on Quangos, large infrastructure projects,green issues, fuel subsidies and so the never ending list goes on. It is that sword in the sand moment. It has got to stop and give a clear indication to the tax payers they are not wasting our money. Then and only then will you get the critical mass of the taxpayers and electorate on side. It’s will not be nice and certainly not be pretty but it has to be done now. No more talking let’s have some real effective action. When it is seen to be done it has been done. If ministers cannot perform as expected and required, like football managers show them the door. Where is the vision , where is the leadership?
March 15, 2021
Maybe the exchange rate will come to our rescue ?
March 15, 2021
Meanwhile the theft from prudent savers continues courtesy of the Tory party’s money printing policy.
March 15, 2021
While the main thrust of the proposition is easy to agree with. This Government is so engrossed in jingoism, micro-managing our lives and the headlines, trying to out WOKE the Woke- community, and encouraging those funded by the taxpayer to use their taxpayer funds to cancel history.
As a Government they have forgotten the meaning of to Govern, they have become rulers and controllers.
Government need to reset itself, become transparent, engage in honesty and stop punishing those whose support they need. Its still a very much a them and us, the ‘we are alright’ notion they have towards the rest of society that pay their wages.
Yes we need to ‘invest’ get back on track, enable everyone to contribute to the health and wealth of the country and society once more. At the moment it ‘wont’ happen as we have a Government that thinks it can dictate and rule. It believes in a them and us society, It has no concept of good basic management, it has lost all ability to be believed in, it refuses to accept as this war on Covid will be on going for years the only people able to work around it are the ones they wish to treat as their personal ‘drones’.
Above all this is not Government by the people for the People. It rule by the few for the benefit of the establishment. How many taking taxpayer money suffered a fall in income, lost out on holidays and benefits. How many of those paid directly by the taxpayer are expecting the taxpayer to award them with annual pay increases. Although you could ask how many of those paid by the taxpayer actually thinks they are paid by the taxpayer and not some mysterious Government bottomless pit of money.
Its know wonder the ‘We don’t believe you’ headline is the most believable.
March 15, 2021
More demand than supply, equals higher prices.
Lack or lower production for a year, equals lower production and stock levels.
Deliberate shut downs mean Companies and consumers reduce costs where they can, first thing to happen is stock levels reduce, future investment is curtailed/slowed, or make do and mend rather than replace.
Anyone who has been taking on losses will want to make up profits as soon as possible hence price rises where they can.
Just a few examples of why prices will rise. Etc, etc.
March 15, 2021
Off topic, JR, do you know whether the UK government intends to recognise the jurisdiction of the ECJ?
https://www.rte.ie/news/brexit/2021/0315/1204033-eu-ni-protocol/
“The European Union will take legal action today against the UK over its unilateral move to change the terms of the Northern Ireland Protocol, RTĆ News understands.
The European Commission will issue legal proceedings through two letters to the British government, following its decision on 3 March to unilaterally extend grace periods which eased the full implementation of the protocol.
There will be a letter of formal notice, triggering an infringement procedure due to an alleged breach of EU law, and what sources describe as a second “political” letter, alleging a breach of the good faith provisions of the Brexit Withdrawal Agreement.
The former letter could result in the UK being taken to the European Court of Justice, while the latter potentially marks the beginning of an arbitration process under the dispute settlement mechanism within the Withdrawal Agreement.”
If not, will it need to ask Parliament to pass an Act analogous to the 1532 Statute in Restraint of Appeals?
https://en.wikipedia.org/wiki/Statute_in_Restraint_of_Appeals
I ask this because the government’s previous capitulation over the Internal Market Bill has left me confused about the legality under our domestic law of its recent unilateral actions on the Irish protocol.
March 15, 2021
Re broadband], you have effectively broken your manifesto commitment plus of course Borisās hubristic statement watering down your support so that we are now 45th in the world for something considered to be an economic driver.
Over at the MOD the Secretary of State manages, allegedly, bureaucracy, waste and incompetence according to a recent report and the Treasury authorised hundreds of millions of Covid loans to t separate companies linked to what looks like a very high profile insolvency, obviously zero diligence for it to go wrong so quickly.
Anybody responsible. Of course not with MPs sitting on their hands so they donāt compromise their chances of getting a job. The phrase āfit to run a whelk stall springs to mind.
March 15, 2021
It’s only possible for governments to control inflation in areas such as energy, because they can legislate to restrict price rises. Where retail spending is concerned, I don’t think we need to worry about inflation. Now almost everyone checks prices on the internet before buying, any business increasing prices unreasonably will suffer a huge drop in turnover. This has completely changed the market for cars where websites like Carwow compare offers between competing dealers.
Customers are a lot more savvy that they were a decade ago. Car manufacturers are reacting by planning to take away the ability to set prices from their dealers, turning them intoi commissioned agents, or to sell only direct in order to try and push prices higher. All that will do is encourage customers to switch to almost new cars instead.
The marketplace will dictate how inflation develops.
March 15, 2021
John
1) Women go to hold a vigil for a murder victim – Police go in, handcuff and arrest.
2) Illegals arrive in dinghies – instantly met by NHS then transported to hotels.
Nice to see whose side the govt is on.
March 15, 2021
bigneil
You wasnt thinking we had rights in our own country, was you ?
March 15, 2021
The vigil, as far as I can make out, was organised by Footsoldiers4Freedom.
The poor girl founded the movement
It was anti vacc, anti mask, anti lockdown etc.
Peaceful vigil was hijacked.
March 15, 2021
What neither the government nor the BoE can control is the price of imported commodities. The extraordinary rise in the price of oil from around USD 1 to over 40 between the early 1970s and 1980 plunged the world into a decade of turmoil and inflation, not least the UK where it peaked in the high 20%s. Other commodity prices are now on the rise – if not oil. Instead we have been lumbered with expensive renewable energy alternatives while gas is neglected, including potential reserves in the UK. The capacity of the political class to screw things up is undiminished.
March 15, 2021
Though I am sure there are good points in todays Police Powers Bill, I also share the concern that it does not get to the nub of the problem. It seems to me that law and order is a bit like the EU. When it is seen not to be working the answer is to generate more of it. It is fallacious to think that law provides the path to an orderly life. Yes some is necessary but balance comes from people recognising the way to behave. It is an absolute that my freedom only extends to the point that it infringes someone elses freedom.
So it is right to curb the activities of such as extinction rebellion, and green eco warriors, but wrong to turn a peacful vigil into a police confrontation, because a mind blocked policeman applies the letter of the law.
The answer to female, or for that matter male security on our streets day and night is a visible police presence. It works where I mostly live, it could work in the UK, but only when government accept it as a financial necessity with the same enthusiasm they have for HS2.
March 15, 2021
And in other news, this morning a large Surrey NHS trust rolled out Covid home testing, a 15 minute result and uploading to a website so I guess that is or will be NHS nation wide and with school children being tested we can expect this to be the new norm.
Maybe those critical of the test and trace budget (report led by Labour MP chair) which I believe includes future years will tell us how much they think this massive testing regime should cost.
March 15, 2021
Cost is but one factor – can we have detail on staffing , other costs, actual results produced – net value judgement compared to walking the streets knocking on doors.
March 15, 2021
One of the downsides of having 2 million plus illegals in the UK is that irrespective of age, ethniciy, or colour, they will never be called forward for covid vaccination. Can we afford the luxury of 2 million potential hazards to the majority.
March 15, 2021
Well yes if the vaccine works then the rest of us are protected from them.
March 15, 2021
Guess they will not fill in a Census form either !
March 15, 2021
You have consistently and rightly been very sceptical when it comes to ‘Official forecasts’, and I have no confidence that the ‘2%’ is going to be any different. My experience of inflation is that it is a bit like Covid-19: if you give it any chance it will grow exponentially.
I think this Government is more likely to choke off rapid domestic recovery with regulation and tax rises, rather than do all it can to encourage it, and as for curbing ‘wasteful spending’, forget it!
March 15, 2021
+1
March 15, 2021
A thought, if you wish to preserve the right to protest, but at the same time prevent said protest from disrupting peoples day to day lives, consider defining where all protests can legally take place. For London a part of Hyde Park for instance. The police then only have to ensure it stays where it is legal.
March 15, 2021
Irrespective of what happens in the US, this is an unprecedented situation, and we donāt know what will happen here. Maybe inflation will stay low. My fear is that IF it doesnāt the Bank of England will lack the willpower to control it.
March 15, 2021
But surely the vast majority of our political class, including the government, actively want inflation. Even if we ignore the Covid borrow and spend, for decades and decades they have engineered society to achieve exactly that.
Its silly in the extreme to pretend anything else.
Sadly the incentives are not there to save, provide for your family, and “do the right thing” as the very opposite actions are rewarded by the state. There is no mechansim to vote for anyone genuinely interested in running the government to live within our means, none of the parties offer that.
March 15, 2021
Main stream opinion does not see Inflation as the main risk at the moment although it is growing . If it was central banks could hardly cut interest rates to around zero and buy up mountains of government bonds .Nor could we allow public debt above 100% of GDP in the first place .
Think of the contrast which the 70s in which wage inflation was driven by 25% rates and visa versa . This “death of inflation” has allowed people (hem hem…) to argue that ,limitless borrowing and money printing had no real cost . Any sensible person would scurry away from the scary man and his muttering ,as well . My warning would be that the inflationary consequences of Policies can be a very long time coming but once here ..fatal Venezuela is a good example..so caution please.
Economists love to argue but the end of old style inflation must surely be linked to the Globalisation of production, the rapid growth of Asian economies, and the long fight against protectionism on which the UK has turned its back.
So Sir John` recommendation the UK turns inward is precisely wrong . It is in fact , the wrong answer to almost any economic question. The only question to which it is conceivably the right answer is this one
” How do I hide the high prices of foods and other EU sourced commodities I have inflicted on the UK at the worst possible time ?”
March 15, 2021
I completely agree that we need to boost our outputs and our domestic supplies. In order to do this we need a huge increase in investment, from both the government and private industry. That’s why it is such a shame that, in respect of the latter, the government has just shot itself in both feet (and probably the head, too) by announcing an increase in corporation tax to DOUBLE that of our closest economic competitor. Madness. And why doesn’t the super-deduction (a good idea) apply to buildings (so that new factories can be included) and R&D (where we lag so far behind all our main economic competitors). A good idea, completely wasted. Again, what a shame.
March 15, 2021
We need more domestic capacity in everything from electricity to timber, from food to broadband to cut the risks from present monetary and fiscal policy.
Yes, the Govt has intentionally caused a massive supply side shock and both Tory and opposition MPs stood by and let this happen. In order for good, decent, individuals to attempt to save the situation caused by MPs people need to be set free and need to know that such dictatorship and expert hubris will not return. The ‘Coronavirus Act’ and all top members of the Govt need to be booted far, far into touch.
People wishing to set up businesses, invest in their education and skills, invest in general, need to know that such grievous abusive violence that the Govt has carried out against them won’t happen again. With Johnson et al in authoritarian command this can not be known. Frighteningly, Johnson has suggested he should have locked the country down earlier – this is an indication of the power and violence he wishes to repeat, this is an indication to anyone wishing to be entrepreneurial that Johnson will stop you at a whim. Any Tory MP, indeed any MP, sitting back and leaving Johnson et al in place, need to reflect hard on the destruction that they have so clearly enjoyed supporting.
March 15, 2021
I reread about the German Enabling Act of 1933 and then thought about the present situation. It is time for Tory MPs to act, it is a pretence to think that the analogy is invalid. Tory MPs have produced authoritarian rule in the U.K. by simply not thinking about what they have done, putting childish party politics ahead of people and the country.
March 15, 2021
And re public spending the council tax is due to go up 4.8% five times the rate of inflation because central government has cut/refuses to provide the funds it should for our services.
Quite happy to waste umpteen billions centrally though.
March 15, 2021
Nig l
“And re public spending the council tax is due to go up 4.8% five times the rate of inflation because central government has cut/refuses to provide the funds it should for our services.”
In reality it has nothing to do with central government. Local councils, esp the Labour ones always increase the council tax because it keeps bums on seats in offices where they dont have to graft for a living, and they collect a juicy pension at the end of it.
Also most councils have a Chief Executive on about Ā£150k + per year, who doesnt have to do much for the money other than appear once or twice a year in the local rag, giving the town Mayor a nice cuddle and a special handshake.
March 15, 2021
I admire your – what is the right word – can’t think of a word to cover ‘determination to ignore reality’ – but, whatever that quality is called – you have it in spades, Mr. Redwood.
Good quality public services? Name one!
Wasteful spending? I can name thousands of examples.
March 15, 2021
I like the Wokingham garden waste wheelie collection every 2 weeks, we push it out to the pavement/ kerb the operators connect to the dumper machine -all gone. The content feeds a process to make garden compost. However this ‘quality’ service comes with a sting at Ā£65.
Anything else and I struggle to think of one.
March 16, 2021
@Fred.H
But that Ā£65 is on top of your Ā£2500 council tax. Am I right? When I last lived in Wokingham (3 years ago), I was paying Ā£2500. I refused to pay the extra Ā£65 on principle. I used to save it up and, if I had to visit Bracknell for any reason, take it to the dump. Stuff it, Ā£2500 is plenty. The green waste should be included.
March 16, 2021
I also drive to Bracknell Tip between waste collections, and have been tempted to hire another wheelie – but at Ā£65 no! I agree it should be a service within Council Tax.
I wish I could go back to Ā£2500 – a distant memory – no closer to Ā£3500.
We are being punished for having a house being empty after 3 children long gone. It is old so I maintain a large garden. I don’t have bonfires, I don’t have compost heaps – I have a pond and encourage most forms of wildlife – draw exception with cats.
March 15, 2021
There is an enormous amount of New Tec coming down the road, one of the things that does is it keeps inflation at bay to a large extent.
New batteries are on there way, this alone will eventually bring the cost of power down significantly.
Finally it will mean that your panels caching Solar, the inverters s Will be far better than ever thought possible, the new Solid State batteries will mean we can go off Grid atlast, we will be able to store our energy, and it will make everyone more than happy to have a car that has a long range battery . And it will recharge as quick as filling up with petroleum.
Alot of good stuff coming .
All we need is to go W T O and get The E U out of our Politics
Tech will bring in a new world over the next few years self drive cars, who needs trains,
It roads on the rails.
There is a lot of good stuff coming
March 15, 2021
One way of avoiding inflation is not to spend your money. The government expects us all to go on a consumer spending frenzy and this will, of course, cause serious inflation.
I note holiday cottage rentals have doubled in price. My local Indian takeaway has jacked up its prices. Petrol has gone up a fair bit lately. Council tax is up its usual 5% but, OF COURSE, this DOES NOT COUNT.
I, for one, will be adopting a policy of austerity after this nonsense is over – until things settle back down again. Demand will go through the roof for many things. Watch things like theatre ticket prices and cinema tickets. Anything to do with a day out. Watch hairdressers jack up their prices. And all the ‘non essential’ shops whose livelihoods has been taken away from them.
They will ALL be looking to make up for the lost business. Prices will skyrocket. And, state pensions will have to go up too – and all spending on state benefits.
Andy, be prepared to dig a bit deeper to fund our pensions. We are SUCH parasites.
March 15, 2021
Thousands, I donāt believe you. Looks like a broad brush everything is rubbish comment. Personally, local authority a sensible one, excellent refuse collection/green spaces,my experiences of the NHS have been very positive even recently (non Covid) DVLA and HMRC, vaccinations coming through, so happy to support our host.
At macro level, certainly the big ticket stuff, defence procurement, big projects like Crossrail, Heathrow. HS2. Broadband, Nuclear power renewal seem shambolic and very wasteful, beyond the competence of our politicians and civil servants to manage efficiently and effectively.
March 15, 2021
Avoid inflation ?
Simple……freeze prices, stop retailers from passing on extra costs. Sometimes you make money in business, sometimes you dont.
March 15, 2021
One thing the Government should do if they want to increase domestic capacity is to throw the “level playing field” agreement right out o the window and spend taxpayer money on what makes sense for the UK economy.
Then the EU will bring a Court case and we will be able to point to increased growth and consumption, and politely ask them how they are doing.
March 15, 2021
JR, I doubt any of your commenters has much of an idea of the difference between “monetary policy” and “fiscal policy”. You don’t help by using those terms interchangeably. Biden’s $1.9 trillion “fiscal” injection into the US economy, is a “Helicopter drop” by the currency issuing US Federal Treasury; NOT the Federal Reserve Bank.
Hence, there is no requirement for the receivers on the ground of those Dollar drops, to throw any collateral back into the Helicopter to balance, the non-balance sheet, of the currency issuing US Treasury. There would be a need to throw collateral in the form of US Treasury Bonds, back into the Helicopter, if the FED had carried out the Dollar drops.
The US system is far more transparent by law than the UK system. The UK “Funding for Lending Scheme”, is still by far; the number one smoke and mirrors scam to make a UK Treasury “fiscal” injection (Helicopter drop) look like a BoE “monetary” intervention. This, to solely disconnect and protect government politicians from any blame, if it all went tits up. There again I may be a little biased.
March 15, 2021
Another balanced and fair narrative.
There are 2 big areas we generally disagree on Yes – Brexit and the EU.
Leveling the Playing Field to me also means providing more support for low incomes paid for by raising the top rate of tax especially after Covid.