It is good news that the traditional media at last recognises there is both an inflation problem and a growth problem. I welcome recent converts to the cause of exposing errors by the Bank of England and the Treasury that have given us too high an inflation rate and now look as if they want to deliver us too slow a growth rate.
I see Liam Fox criticisingĀ the Bank and the cross party Treasury Committee daring to take a rare peak into the policy errors of a Bank they wrongly say is independent. That is the same Treasury Committee that insists on interviewing a potential new Governor of the Bank and deciding whether to approve the appointment! The Chancellor of course approves and indemnifies the Bank against all money creation to buy bonds under Quantitative Easing anyway.
I would like the various worthies of the Treasury and Bank establishment, official and elected, to conclude two simple things. One, the Bank and Treasury need to work together on a common policy. Two, that policy should target 2% inflation and 2% growth as the longer term average. If the Governor gets to the point where he or she thinks the Chancellor is inflating Ā too much and will not listen they should resign. If the Chancellor thinks the Ā Governor is deflating Ā too much and will not listen he or she should remove them. All this would become public and allow debate and Parliamentary input.
Whilst printing too much money is usually inflationary and is mainly a matter for the Bank, running an economy with too little domestic capacity and enterprise can also be inflationary and mainly needs a government response. Inflation can come from excessive private sector credit build up, susceptible to Bank controls on the commercial banks and to interest rates. It can come from excessive demand and borrowing by the state sector, subject to government control of budgets.
Today Bank policy has corrected from the very inflationary. Government policy is insufficient to tackle capacity shortages. Neither Bank nor Treasury has rolled out a proper growth strategy which is much needed.
May 18, 2022
Good morning
I find today’s article a little disingenuous. As we all know, the BoE responded to government policies during the Lockdown. There is more than one lever on the economy and one such lever, which is only really mentioned here by various contributors, is that of government spending.
The cracks in the economy that the government keeps papering over just get wider and wider, and the “Not me guv'” attitude is wearing a little thin.
After over 10 years in office the Conservative Party is looking too complacent and current pronouncements by MP’s on what we should do are just arrogance from an out of touch class.
Roll on 2024.
Reply I have often written about the need to reduce wasteful and ill directed spending with proposals
May 18, 2022
Reply to reply
But to a lot of us you are a lone voice who seems actually fully aware of the situation. It’s not just your party it’s all of them with no concept on the management of finances. Oops I forgot it’s not their money. Waste is like a cancer it just keeps growing and eventually it kills the patients.
May 18, 2022
turbo, JR is shouting at the referee from the sidelines, he has no more idea how to get a “growth and an inflation objective” than you do. At times like the present, his ideology of Laissez-faire neo-liberalism, has no answers to the nation’s current problems. The BoE can do nothing to counteract the supply side constraints that are causing the inflation. Only Fiscal Policy can get a grip on this problem. BoE Monetary Policy is useless; the sooner we shut it down the better.
It reminds me that before the incarnation of the current version of the US FED, that country did not have a Central Bank with a monetary policy for 75 years. Unfortunately, we have a bog-standard Conservative Party Laissez-faire neo-liberal Chancellor.
As the man said; Go back to your Constituencies and prepare for a decline in your standard of living and the global status of your country.
Reply Try reading what I write before launching criticism. I am recommending fiscal actions to tackle current problems!
May 18, 2022
acorn likes using the fantasy words…Laissez faire neo liberalism
May 18, 2022
Reply to reply
I / We know. I was being generic not specific. Telling people to work harder and not take a pay rise to lower inflation rather rather grates when those same MP’s have just received a very large pay rise.
May 18, 2022
Too True
May 18, 2022
Reply to reply:
Unfortunately, your political party thrives on virtue signalling, glory seeking, pet projects, climate religion, and ‘saving the world’, all financed by the UK taxpayer on an involuntary basis.
Your political party is bringing the UK to its knees and after more than a decade in power, and an 80 seat majority, it has nobody else to blame for the lack of planning and good management.
May 18, 2022
Like the reformation challenged to the papal authority to return it to a spiritual faith, so our parliament needs a reformation to challenge the civil service authority, virtue, woke, climate crusade stance and return to the people
May 18, 2022
Agree totally but we should absolve our host from any blame. Remember 100 + MPs on āthe payrollā so they cannot push back, another 100 ambitious so they will meekly accept anything leaving a mature an experienced group but without the heft unfortunately.
2024 is indeed concentrating the minds because many are worrying about whether they will even keep their seat let alone have a ājobā. Maybe an apocryphal story but the legendary Zulu king Chaka springs to mind who marched some of his men off a cliff to prove their loyalty.
May 18, 2022
reply to reply….and what has ever happened about it? Your wise advice being ignored just like the public is.
May 18, 2022
Repky to reply,
Yes you have, but who is listening. Time is running out for your government who are working their way to an inevitable suicide. Remember that old mantra,” It’s the economy Stupid”. The alternative is appauling as an electoral choice.
May 18, 2022
agricola. ‘The alternative is appalling’.
It certainly is!
That is, bearing in mind that none of the small parties are making any headway.
Perhaps N.O.T.A. will be our only electoral choice in 2024.
May 18, 2022
Agric. you don’t have to vote Labour. Look around. There are other parties which, of course, the socialist media don’t publicise.
May 18, 2022
Good Morning,
Sir John, you lived through the bad years of damaging inflation and policy response of the 70’s and 80’s, I recall borrowing rates for houses well over 10%. We do no want to re-learn the lessons of those years. Do you have confidence that ANYBODY in the Bank/treasury has the experience and knowledge to address the present situatio?. As a friend of mine recently commented, does the Bank/government really think increasing interest rates up to 2% is going to make any difference to inflation running at 10%?
May 18, 2022
One of my mortgages went up to 17% the rent I was getting on it paid only about half of this interest leaving me to find the other half!
If it isn’t hurting it isn’t working said the idiot John Major before making an appalling mess of leaving the ERM wasting Ā£billions. But the man failed his Maths O level & yet Thatcher foolishly made him Chancellor! Still no apology for the pathetic man.
May 18, 2022
LL, are you still in the Buy-to-Let game? Take advantage of the current screaming inflation in the residential property market and get the f*** out of it. There is no future in Buy-to-Let. I can see in the next decade you will be forced to sell out to a Housing Association or a Local Council. Nobody, except legacy Thatcherites, in Westminster/Whitehall, wants number 20 Acacia Avenue charging rent on number 22 Acacia Avenue. It is a guaranteed recipe for major socio-economic divide at street level.
May 18, 2022
And if people at number 22 can’t afford to buy or even are not sure they want to comitt to purchasing and prefer to rent or are students li ing at number 22 for a year ir two or are doing a job contract that they know will end?
Why do you want independent individual landlords to be forced out acorn?
Your profound dislike of people renting to others is plain for all to see.
Presumably if your beloved state were the only ones allowed to be landlords then all would be fine.
May 18, 2022
LL
And if he was to ever apologies, what difference would that make ? It would most certainly would not undo the harm the ERM and the Euro Fanaticism caused.
Just accept that, despite everything, Sir John Major’s and the ERM’s greatest achievement was the result of the Glarious Referendum in 2016.
Anyone can say sorry, but few will ever meant it.
May 18, 2022
Of an age I remember at school in ’75 putting my weekend wages cutting pigs’ heads at a butcher’s into inflation linked national savings certs. A no brainer until they were pulled when inflation hit about 25%. Paid for interrail to Italy which enjoyed 30% plus.
May 18, 2022
Those pesky tenants. Surely if you had said ācome on, play the game, your rent is only paying half my mortgageā – your tenants would have been happy to pay more. After all, Iām sure they were keen to buy you a house. Who wouldnāt want to pay rent for 25 years and buy you a house? Where do I sign?
May 18, 2022
Indeed so, Peter. In the predicament we’re in right now, talking of 2% inflation and 2% growth targets sounds very much like choosing deckchairs on the Titanic. Every other discussion of our economic prospects is talking about recession and stagflation. The BoE is now warning of ‘apocalyptic’ food price rises, which will continue to undermine public confidence in the government. Can we not see now that escalating international tension against a major food and energy producer, bringing about food and energy shortages, was a very bad policy? Even the EU is starting to wake up to the boomerang effects of what its anti-Russia sanctions have led to. The fall of Mariupol is surely the right moment for a new look at the situation, prioritising a return to stability on world markets, not ideological posturing – which did Johnson little good in the recent elections anyway.
May 19, 2022
Oh how they laughed when ignorant mass of US politicians called Russia a gas station with a country attached!
They are now finding out -the hard way-that the “gas station” is the forecourt of a vast hypermarket.
And they are not laughing any more-especially as the Russians do not want their fake fiat as payment for their goods.
May 18, 2022
+1
Ha! No!
The BoE wrings itās hands about apocalyptic food shortages.
And yet they get rid of farmers and keep building.
In a food apocalypse youād see TRACTORS (š¤).
Project fear rides again!
May 18, 2022
Sighā¦**its
May 18, 2022
@ Peter Wood – do not overlook at quantitative tightening (as now pursued by the Bank) acts in much the same way as interest rate increases. (I did see someone’s recent estimate that the Fed’s QT is equivalent to a c.6 per cent. increase in interest rates.)
May 18, 2022
+1 on interest rates. All it will do is provoke wage claims. Too late. They should have been put up years ago.
May 18, 2022
If they say 10% then its closer to 15%
May 18, 2022
Peter, I thought the same, but all ministers in cabinet. Johnson and Sunak appear totally clueless, acting against any form of conservative economic principles and are mouth pieces for their civil servants who have no intention of helping them remain in office.
May 18, 2022
Haldine wanted to blame Brexit!
Pass the blame, take the money and qudos appears to be infectious way beyond covid.
May 18, 2022
not just the ceiling hastily reduced, but the trend over years of ever rising interest rates, and the uncertainty caused.
May 18, 2022
Do not forget that in those days of the 80s the BoE was not independent and some John Redwood was Director of the No.10 Policy Unit.
Which is to show that some of Sir Johnās recent comments about the independence of the BoE might have to be taken with more than a pinch of salt.
So much easier to comment on what is happening now than on what happened at the beginning of the 80s.
Reply You are silly. All I have written about the Bank relates to its actions and powers since Gordon Brown’s changes. Why do you always need to knock, and why do you so often get it wrong?
May 19, 2022
Reply to reply: I can easily accept when I am wrong.
When are you going to comment about the āGreat Resetā, āGreat Replacementā and other similar hare-brained ideas from some of your other commentators?
Or do you consider these to be right?
Or are they what you wish to have as a background to your website? To improve its credentials, maybe?
Reply I let people speak for themselves. I disagree with much of what you and they send in and I allow
May 18, 2022
I am pleased to see you include both paid and elected officials in your criticism. The attempt by your party to dump the blame on only the BOE is disgraceful. Borisās sloping shoulders again.
Is there no one with an announce of economic sense who could have seen that their spendthrift policies, no surprise the NHS is wasting much of its recent funding on bureaucracy, plus the vast expansion of the money supply would feed into the inflation rate. Commentators have been raising the spectre of this for the last 18 months.
And in other news we see the EU instantly offer āconcessionsā when we decide to actually fight. When will our frankly pathetic negotiators/politicians learn. As in my post yesterday, he who can walk away has the advantage, and the minute we start to do it, it moves to us.
And in that respect it is being that the ineffective S.O.S is to be replaced. The report alleged that many civil servants in the NI office have nationalist sympathies, sub text, I guess, they are āplaying for the other sideā
After umpteen administrations, why is that our elected representatives continue to allow the fifth column, namely many civil servants to obfuscate and delay the democratic process?
May 18, 2022
If the UK discovered and patented a near-zero cost cure for Cancer, and offered it to the world at Ā£500 per person, our financial woes would be rapidly solved.
So fast, we could then gift it free to everyone for life.
May 18, 2022
Many of our elected representatives along with the HoL unelected blockers are also fifth columnists. We need a total reform of our election system, NHS, law enforcement, education, and other institutions running this country, as I listed the other day. Many have a mindset with little or no knowledge of the real world. These are dangerous people.
May 18, 2022
Christine. If you are thinking of banning political parties, making all M.P.s Independent.
It is an interesting idea, I admit.
But wouldn’t it mean we returned to the times when only the rich could afford to stand as MP?
Proportional Representation is another possibility but that tends to lead to uncertainty, chaos and power deals.
I thought ages ago, that if it was possible to abolish the power of the Party Whips in H.o.C. it just might help MP’s who actually do listen to their Constituents, to vote in their Constituents’ interests.
May 18, 2022
It’s the deceit that needs to be eliminated. So many MP’s elected on the basis of lies and fraudulent promises to uphold Brexit. MP’s can blatantly lie to the electorate in order to get elected and then immediately do the opposite, and there is NO comeback. None at all. It’s an invitation for dishonest people to become MP’s and if they are dishonest then what else are they getting up to with taxpayers money? Why is such blatant dishonesty among MP’s allowed to continue? No wonder some MP’s become criminals, and they are STILL allowed to continue in Parliament!
MP’s should respect democracy, even if they disagree with the result. Any that try to overturn a decision of the electorate should be kicked out, otherwise there is little point in having a democracy, or a vote!
May 18, 2022
I do get the impression from the UK media that (in simplistic terms) the current Government is making living more expensive, whether by taxation or monetary policy or Green idealism, and then proposes that the cure is to use complex and expensive bureaucracy to return a minute amount to a small portion of the general public.
Am I wrong?
May 18, 2022
Another thing that would be very good for growth is to stop blocking the damn roads. London now the most congested city in the world a report claims.
Plus now we have our appalling transport unions calling for a Tube strikes on Queen’s Platinum Jubilee weekend. Tube drivers already earn about three times what a junior doctor starts on and with out the Ā£100k of student debt or six years or studying unpaid.
Is it too late to get Norman Tebbit back (or cloned) and get him to stop the unions holding the country to ransom? Why on earth did London re-elect Kahn? Oh yes I remember the Tories had the pleasant enough, but a boring nonentity candidate.
May 18, 2022
Indeed but why just 2% growth? Sunak suggest there is little he and government can do but there is loads they can do.
Undo all his vast tax and NI grabs, scrap net zero, cut the size of the state, scrap net zero, kill HS2, have a bonfire of red tape, kill the 40% personal overdraft FCA rules, reverse all the attack on landlords and the self employed…
May 18, 2022
8% growth is perfectly possible just cut out all the duff degrees and get these people to profitable work rather than gender studies degrees etc and debt. Then halve the size of the state and put these people to do something useful for a change for a good start. GET cheap reliable energy and get fracking.
May 18, 2022
In short stop doing vast harm as Gov. are doing and roll this back.
May 18, 2022
LL have you ever considered being a stand-up comedian. I see you as a modern replacement for Bernard Manning. You are going to need a team of scriptwriters; repeating the same rant everyday, as you do on this site, will get you the same care home type audience as you get on this site.
reply Why bother to come here to insult your fellow readers?
May 18, 2022
Lifelogic.
Agreed on all points in your three comments!
Net Zero policies are the major lunacy this government are guilty of so far.
Having got most of U.K. out of the E.U. Johnson seems now intent on subjecting us to some World Government instead.
He cannot be trusted to not sign up to the W.H.O. pandemic treaty.
As I said I agree with all you have said.
Cut the size of the State. Yes, sack most of the bureaucrats throughout. (Particularly in the N.H.S.).
Just think, that would increase the labour supply!
May 18, 2022
Sounds like a Tory manifesto that shouldāve been adopted
May 18, 2022
You keep pandering to the autocratic social and economic left and let’s see where that gets us.
A captured Tory party represents a civil and economic threat
May 18, 2022
This government just loves social engineeringā¦. something theyāve learnt from the EU
May 18, 2022
But the alternative is nowhere to be seen. It would be rattled down by BBC and all the others so is a non-starter. Even our host stays put for fear of what I wonder? The clearest answer is for those left to rally together = should have happened with UKIP circa 2010= and put his socialist monster liblabcon out of its misery, but they all just carry on behind a pied piper.
May 18, 2022
Nigl
The problem is, many of those in charge have no idea what it is like to work in the Private Sector. Mt MP as I have said many times, ALL Public Sector work. Local council. NHS admin. Political SpAd. Not even a mention of doing a paper round. How can this man relate to how I and others live. No wonder we get / hear so much
advice / nonsense. But don’t worry, my council reverted back to the useless Lib Dems this year and I fully expect the same come 2024. That’ll teach em !
May 18, 2022
Do SILENT Tory MPs believe that a US Socialist State and CCP backed Marxist now leading the WHO should be able to impose restrictive laws upon the British people as per the WHO treaty that it seems this progressive PM intends to sign us up to?
May 18, 2022
Boris has probably been promised the top job at WHO in two years
Reply. Stupid nonsense.
May 18, 2022
Right to reply
I wasnāt being completely serious just highlighting that Boris likes to show off to an international audience and the greener the betterā¦well anything UN related
May 19, 2022
glen
One only has to look at what past PM’s and Deputy PM’s and MP’s are now doing to see that what you have written is closer to the truth.
There was a time when a failed but well connected politician, mostly European to the fair, was sent to Brussels. A top job, and some even became Commissioners.
May 19, 2022
reply to reply…..agreed. It is not realistic to think ANYBODY would offer Johnson a job now, or in 2 years time.
May 18, 2022
+many
I expect they think itās going to be ever so jolly.
Lots more jabs and imprisonments.
And all responsibility taken out of their feeble little hands.
Theyāll try to do a Lady Macbeth..and it wonāt work!
Do they holiday in Sri Lanka I wonder?
May 18, 2022
Why do we need 2% growth every year?
If we had 0% growth every year – and the rest of the world had 2% growth – think how cheap our goods and services would become in comparison with theirs. Exports up! Imports down!
Why the obsession with growth?
May 18, 2022
They need something to compare and talk about at Davos
May 18, 2022
Well we’re not getting it so nature restores the equilibrium
Prize for the most stupid economic idea in history must have been to pay people for doing nothing and stopping fit 20 30 40 year olds from working, then printing money to let this go on for nearly 2 years! It’s like that soccer programme when you had to guess what happened next.
Monster raving loony wouldn’t have dreamt it up.
May 18, 2022
Globalisation!
If we were self sufficient in food and energy and didn’t rely on China for our manufacturing we would be protected from global shortages and would only need to protect against famine and pestilence in this country not the supply chains around the world.
The perfect storm of too much money printed meeting too little global supply (and silly UK house prices which is another area we are not self sufficient in with too little supply for the artificial demand) has truly bent us over. It is likely transitory until public sector ay demands are joined by the private sector needing to follow suit.
May 18, 2022
I suppose there is just a chance that if the govt do decide to play hardball on NI and the EU retaliates with a trade war as it threatens, the govt will be forced as a necessity to drop the leftist gesture politics of high tax, high spend, and execute an emergency U- turn to make the U.K. more competitive, to counter the EU hostility. An example would be a U-turn on corporation tax. instead of putting it up, cut it to 15%, the new (foolish) biden-inspired global minimum. Ireland is going to have to put theirs up to 15% so that huge Irish competitive advantage will go and Ā£10s of billions of GDP and Ā£billions of tax will move the U.K. there are many other examples of similar policies which would make a lot of sense in the absence of a trade war, but which such a war will make an absolute necessity.
I think it is the duty of those advocating standing up to the EU on NI to address what we will need to do if we get into a trade war.
May 18, 2022
The excessive growth rate in population inflates demand. Every product consumes energy through its conception, manufacturing, sale, distribution, use, maintenance, repair and disposal, plus tax.
The UKās access to energy is scarce & expensive, increasing demand further and inflating its price still higher, plus tax.
The UK is borrowing billions of Ā£ to pay aid to other nations which inflates the cost to our citizens. Citizens who cannot cope with living costs add to increasing demands on UK tax income that Joe Public funds.
May 18, 2022
I reckon they are too busy following the globalist/Remain/return/Project Fear/demonise other powers agenda to bother their heads about stability or interest rates or their customers ( lol).
May 18, 2022
Thatās getting a bit too close to reality to print
May 18, 2022
Massive money printing, manufacturing shutdowns, supply line destruction caused by government policy are certain to create inflation. How lucky that the Ukraine came along to blame it all on.
Now you want us to believe that people who can’t even forecast Christmas will be able to solve the problems if they have targets?
The very last thing the economy needs is a government response. What would be far better is for all the economically illiterate politicians, bureaucrats and bankers to crawl into a hole and let free markets sort out the train wreck they have caused.
May 18, 2022
Allison Pearson today in the Telegraph on our dire āenvy of the worldā NHS that wills thousands and fails millions.
āNo surprise, the NHS has spent its windfall on yet more waste and wokeryā
May 18, 2022
Again “what happened next?” It’s not difficult stuff.
May 18, 2022
L/L. Meanwhile my friend is having to wait a week for a scan on her arteries as her doctor thinks she has a DVT. Normally people are seen in 24 hours. My husband has had his endoscopy cancelled for the 3rd time. The NHS is finished as we knew it. But then how is it ever going to cope with the numbers of people being invited in every day?
May 18, 2022
JR: “Today Bank policy has corrected from the very inflationary.”
Would you please explain what this means when we learn today that inflation was 9% in April up from 7% in March!
Reply Last year’s excessive money printing caused todays inflation. Todays tighter money will deliver lower inflation next year
May 18, 2022
Reply to reply
Thank you for your reply. It sounds rather like too little, too late.
May 18, 2022
Why do we need a growth objective? Is that so government can tax and spend more? How about a reduction in government spending objective, so we don’t feel we need to work more than we need to for a decent living, rather than sweating away just so government can waste our productivity?
How about a housing cost reduction objective as well? Employees have to spend so much on rent and mortgage on their home, inflated by international, second home and holiday let demands.
May 18, 2022
Why are HMG so frit?
The EU bullies continue to play their games to disenfranchise NI from GB by their pettyfogging interpretation of the protocol.
Yet NI need GB foodstuffs… and anyway the populous can enjoy some summer entertainment after the pandemic, let the political jousting commence!
May 18, 2022
Alas inflation is the tide going out – we then see which nation isn’t wearing any trunks.
No wonder they’re so keen on a war in Europe.
May 18, 2022
Completely off topic
Thereās a very interesting video from Simon Webb, History Debunked on YouTube
Pensioners get Ā£7000 per year , it costs Ā£11500 to house one refugee in a hotel for three monthsā¦. interesting viewing
May 18, 2022
I agree.
May 18, 2022
I find it very strange. I was was spot on about the pandemic saying we should have protected the vulnerable and get on with lives, I was spot on with Brexit, I am spot on with saying green energy is uneconomic nonsense. Iāve made many other comments and zone been spot on with all of them.
I sit back and reflect that I would be the one and only contender as the next PM if I were an MP. Even John would be PM by now if he repeated what I said.
May 18, 2022
Gets my vote
May 18, 2022
Sorry it doesn’t work like that.
May 18, 2022
Perhaps our government want a period of high inflation, a.k.a. robbing old people slowly, to reduce the debt caused by government profligacy and error.
May 18, 2022
So after 12 years of supposedly Conservative Government but actually continuing with Blair’s Policy Agenda, minus EU membership, we need a new Energy Strategy and now a new Growth and Inflation Strategy because the policies they’ve been pushing have comprehensively failed.
I wonder when it will dawn on the CONs that every one of Blair’s policies has left the country in a worse condition than it was before he took his wrecking ball to the Constitution and economy?
And when they’ll reach the obvious conclusion that the only thing which will save them electorally is to start dismantling Blair’s client state in the Civil Service, Quangocracy and Public Sector.
May 18, 2022
Sadly, there are too many MP’s that think he is the New Messiah, especially in the Conservative Party.
May 18, 2022
Donna.
Yes it does rather look like the CON party have continued Bliar’s policies on many issues.
We no longer have a CONSERVATIVE Party, do we.
May 18, 2022
Inflation is happening for a number of reasons.
– Supply shortages caused by the pandemic and the Russian invasion of Ukraine.
The Civil Service led Government :
– Printing too much money.
– Not prepared to control, detect or claw back fraud
– Spending too greater a proportion of GDP buying up goods and services with unlimited supplies of taxpayer money and thus pushing up prices.
– Implementing Net Zero with policies designed to increase the price of energy through creating shortages of North Sea oil/gas and preventing fracking. This is to get the country used to the lower standards of living necessary to get to net zero by 2050 as renewable energy will be expensive and intermittent. The pathways to net zero include food, energy and travel restrictions, reductions and rationing.
May 19, 2022
That looks to me like a pretty good ‘first draft of history’ of 2020-22, original Richard. You could add that the digital ID agenda was trialled, though not yet fully implemented so far. I see Iran has brought in food rationing via a digital ID, and the idea of controlling people’s food-buying decisions is bound to spread, as it fits the net zero target rather well. You could also add restrictions on freedom of expression and the right to protest which Johnson’s government is keen on.
May 18, 2022
While this government continues to intervene in the markets the confidence declines resulting in low growth and high inflationā¦.thereās a direct correlation between this governments net-zero policy and its effect on the economy
May 18, 2022
The lack of domestic capacity has been caused by recent governments. They have thought obtaining supplies of all kinds from overseas was most fashionable, friendly and beneficial. They have encouraged people to think the same in their purchases. All of these turn out to benefit others more than ourselves.
But even cheap items from overseas have to be be paid for by sending our money away. This had only solution – selling our assets to foreign buyers for currencies along with inward foreign investment. A dangerous typically short term solution, but The City dwellers and their friends in high places were OK with this, they made personal money.
A drastic immediate change must be made. No more prostitution of our nation by offering our businesses to foreigners as a priority. The means of stopping it must be used.
Government must buy from home owned sources and give benefits to get our people established and expanded.
We don’t want to see Boris again standing proudly in front of a sign of a foreign company as he did with Thales – French – as he did the other dsy.
May 18, 2022
You’re only as good as the people that work for you and if they don’t perform you either get rid of them and get somebody who will do the job you require or take control yourself. Too many such as BoE governor, high-ranking civil servants, quango chiefs and other such luminaries seem to think they have cosy little sinecures.
May 18, 2022
John, what do you believe the inflation rate is right now and what do you think it will be in October 2022?
When you look different people and experts use different figures.
ONS “The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 7.8% in the 12 months to April 2022, up from 6.2% in March.”
BBC “3 hours ago ā UK inflation is rising at 9%, its fastest rate for 40 years, and could go even higher.”
The Bank of England has warned inflation might reach 10% within months, as the prices of fuel and food put pressure on household budgets. Energy bills are the biggest contributor to inflation at present. Fuel prices are also surging, with average petrol prices hitting 161.8p per litre in April 2022 versus 125.5p a year earlier. The April price is the highest on record. ”
BBC “However, since that date (April), anyone earning more than Ā£9,880 per year (Ā£12,570 from July) has had to pay 1.25p more in the pound in National Insurance contributions as a result of the new Health and Social Care Levy.
This is the BBC and they don’t say this will reduce in July as the threshold before paying NI has been increased and this will take millions out of paying any national insurance (which I actually think is a mistake because people should contribute to their healthcare), it is one of the things people claim is the most important to them the NHS and the most valued of all charges.
Reply There are various readings of inflation – CPI, RPI, Core CPI etc all defined and published as data series. October will be another high reading like April owing to catch up rises in energy prices from price cap. Thereafter inflation will fall.
May 18, 2022
Swiss inflation at 2% maximum 2022. Not in the EU. Independent CB.
People need to ask why not in the UK?
They’ll see a bureaucratic but still organised government thinking ahead and looking after the peoples’ interests, via referenda. Not a kamikaze madness.
May 19, 2022
SJS – Yes but the Swiss insist immigrants can support themselves before they get a work permit and residency. They don’t appear to give away Swiss accommodation and benefits to anyone that floats up. The fact the cost of this isn’t even discussed when discussing inflation is amazing when you consider the Ā£5m per week in hotel rooms alone, that is without the free council housing given to immigrants with children.
May 18, 2022
Never mind, the rate of inflation will reduce just before the state pension increase is calculated.
Your party seems to be aiming for Euro parity. Perhaps we can shift over to the Euro at that point.
Have a look at the Swiss Franc exchange rate versus the British pound over the last 60 years, and see what a well managed economy looks like.
May 18, 2022
Growth will probally look after itself if our government remove all the penalties currently imposed on peoples lives. Excessivly high taxation to begin with. Crazy fuel penalties when we control much of this at source, but then allow the international energy companies to charge us world prices for fuel originally ours. Doing nothing to take the excess profits of said companies back to reduce fuel costs. Then the government itself is raking it in with VAT and Green Levies that add to inflation and damage the economy. This is largely a self inflicted injury. Vastly increased commercial activity, or call it growth is a much more intelligent way of feeding government coffers than strangling such activity at birth.
May 18, 2022
Reading through the headlines. Iām on a 6 figure salary and Iām feeling the squeeze every month. I cannot imagine how tough it is for the rest of the country. A combination of throwing hundreds of billions at a flu virus (that made NO difference – see Sweden) and trying to destroy our use of carbon fuels (again which makes mo difference). Home secretary posturing and not stopping mass illegal immigration (again which has made no difference).
Letās not beat around the bush. Itās been an unavoidable, unmitigated and absolute economic disaster. The only positive is Labour and Liberals would have done worse.
The main outcome is that the voters will realise they need a leader who can reject the woke political group think and that means a very tough person who will have to decapitate the woke monster destroying our economic lives.
May 18, 2022
Too logical. People will only start to think like that when the food fags choice becomes an issue. Then complain there’s no hand outs. Then look for somebody who offers them. Enter Labour to knock your 6 figure salary down to 4 figures.
May 18, 2022
Its only mid week and my four local fuel stations have already put up the price of petrol (e10) by 6pā¦.doesnāt this government understand the economics of supply & demand, market stability & confidence
Its solution to everything is to import renewable wind-turbinesā¦. astronomically rising energy and fuel prices and therefore inflation ā stop net-zero
May 18, 2022
It’s no wonder the statue of Mrs Thatcher is in Grantham.
They couldn’t possibly have it in Parliament Square reminding them all daily how utterly incompetent and useless they are ….. and how they’ve so comprehensively betrayed her legacy.
May 18, 2022
Indeed but for all her many merits even Thatcher made huge errors – closing many excellent grammar schools, embedding us further in the EU, failing to cut the state or taxes back sufficiently, sticking with dire state monopoly healthcare and the largest one of all appointing the foolish John Major as Chancellor and then even letting him replace her.
May 18, 2022
But surely, the root cause the problem is the massive quantitative easing/money printing required to finance the stupidity and ignorance of lockdown, school closures, business closures, WFH, furlough, bounce back loans, T&T, vaccines that did not work and useless masks.
The new critics are late to the party. Why were they not shouting long and loud before the damage was done and when the destructive Corona Virus Act was being nodded through Parliament. Where were sane heads to oppose this nonsense that has done and continues to do damage to the country?
Inflation must be curbed and growth is essential but it is all fire fighting now. And where will opposition come from should all the mistakes of the last two years be repeated? no doubt they will all once again troop through the lobby, like the obedient uniparty they are.
Where are
May 18, 2022
Where are they? I meant to ask!
May 18, 2022
Indeed so Sir John.
However the elephant in the room is the level of Assets that have been purchased via borrowing with essentially zero interest. When the interest rate on these loans goes up then the purchasers will have to sell them as they only bought them with borrowed money – they have no money of their own and cannot finance the interest interest payments. We have elements of the 1926 Stock Market crash here.
Remember the old Chinese saying – ‘may you live in interesting times’
May 18, 2022
PM said today heād look at all the options to get people though to the other side (ref cost of living) SirJ please ask the PM to consider repealing HS2, net-zero and start fracking for shale gas
May 18, 2022
glen cullen.
That sounds like a good starting point.
May 18, 2022
Dear Sir John, In the “longer” term, we are all dead. Governments are short-term. Judging them by “longer” term targets invites the distortions we have seen, for instance, in A&E waiting targets, school exam targets and, at a macro level, in countries meetng the Maastricht tests for joining the single european currency.
You are also unwise to conflate an inflation target and a growth target. The inflation target was always intended to be short-term, a way to manage instability in prices and to damp economic cycles, using tools available to the government/Bank. Even that is not easy. It worked well in the early years when the sun was shining. Over the past decade of storms, inflation has gyrated and rarely been close to 2 per cent.
Economic growth is a stuctural matter and should not be seen otherwise. The Government can only achieve a target by its own actions if it wishes to revive Gosplan (Soviet Union 1921-91), or Labour’sNational Plan (1965-67?), or plan for continuing mass immigration (Labour 2005 – 08). Otherwise Government can only try to provide stable and ecouraging conditions for the private sector to expand, as you did under Mrs Thatcher after the debacle of 1981. Note that, as far as I know, you did not set any growth target.
May 18, 2022
Off topic, the Guardian has ex-WTO chief Pascal Lamy saying there has to be a border between the UK and the EU:
https://www.theguardian.com/politics/2022/may/18/uk-has-to-accept-border-irish-sea-inevitable-ex-wto-chief-pascal-lamy-brexit-boris-johnson
But the UK government has never denied the existence of a border, it has been the Irish government doing that, implying that there is no border and one must not be allowed to “re-emerge”, for example:
https://johnredwoodsdiary.com/2021/02/16/buying-from-the-eu/#comment-1210711
āWe had a deal today in relation to a wording that, in our view, would provide the assurance for many people who were concerned about the potential re-emergence of a Border on the island of Ireland.ā
We know where the border between Northern Ireland and the Irish Republic is located, and that is where it has been for over a century, and in fact a little googling revealed that when he was expressing his opinion five years ago this gent clearly did not imagine that the border was actually in the Irish Sea:
https://uk.style.yahoo.com/ex-wto-boss-pascal-lamy-irish-border-post-170900000.html
Where he and others go wrong is in not realising that any checks can be performed away from the border:
https://johnredwoodsdiary.com/2021/07/13/the-northern-ireland-protocol/#comment-1243376
“Interestingly during a recent internet discussion Lord Frost was asked how the Common Travel Area for people was managed to avoid illegal immigration and you can see his answer here:
https://www.youtube.com/watch?v=H7L7ICHjWWk&t=2622s
āThe way this works is by very close collaboration between UK and Irish authorities ā¦ it shows that you can in fact manage these legal differences, things that change when you move from one territory to another, without having processes at a border, they can be managed satisfactorily in other ways, and that is a real world proof of some of the points we are trying to make in a more theoretical way.ā”
May 18, 2022
The sudden onset of what can now be construed as an “inflation pandemic” is accelerating past 9%…
Just like the Chancellor did quick and unusual things to assist people and businesses during the Covid pandemic, it is entirely reasonable to ask him to help individuals and businesses at risk now:
A few suggestions on top of the excellent ones already put forward on this site, apologies for any repeats:
1) Reinstate the triple lock and backdate pensions uplift from April 2022, a Tory manifesto commitment.
2) Remove VAT from energy, another Tory manfesto commitment. (Use legal instruments to negate NIP issue as Liz has announced).
3) Reduce energy bills (a main driver of inflation) by massive insulation initiatives (maybe Insulate Britain are right?).. more solar initiatives, more off peak electricity savings… why is it when we’re sometimes generating all we need on green solar/wind are we all paying top dollar as if it’s high priced gas/coal?
4) Energy security by the approval to drill/mine/frack all our today needs, whilst transforming to blue then green hydrogen.
5) Food security – where are the farming initiatives to expand UK food production… Low carbon farming by greenhouses to grow all year soft veg and fruit, instead of importation! Targeted support for UK wheat/veg oils.
I expect to see Boris, Rishi and Mr Bailey live on the podium at least twice a week, just like we had during the C19 pandemic, to explain what measures they are putting in place to ensure we get through this and inflation gets back under control.
I would hope Sir John, you would be instrumental in pursuading the various key people to get a grip and lead us out of this mess, with practical measures that everyone can see and feel are right for our country.
May 18, 2022
All this breast beating about growth and inflation!
What the country needs is:
a) Food self-sufficiency.
b) Investment and imagination needed to work rapidly towards UK generated supply of energy.
c) Reduced Corp Tax, but Windfall Tax introduced for excessive profits.
d) Restructure of NHS and division of Health services into specialisms which will operate 6 or 7 days per week.
e) Spending to constantly be re-examined in the light of major cost over-runs.
f) Defence to be encouraged, if necessary forcibly, to develop and buy via UK suppliers.
May 18, 2022
I have a pearl of wisdom to offer those struggling with food prices.
Eat less food.
See, itās not just Ministers who have good advice for the plebs.
May 19, 2022
The inflation is there because of the very high level of Government borrowing in FYR 20/21, followed by substantial borrowing in FYR 21/22, underwritten by a huge expansion of the money supply by the Bank of England. This comprised both a near zero base rate and lots of quantitative easing, the latter essential to finance government borrowing. As long as the inflation rate exceeds wage growth, it is baying at the moon to expect increased investment and a growing economy. Only when inflation is on the way down will it be reasonable to expect increased investment and economic growth because both of these depend on consumer confidence.
Nevertheless, the plight of the poor is dire. The Conservative Party likes to think that it is a tax cutting party, so how about ensuring that people on the minimum wage pay no income tax and no NI. In round numbers, that is an income of Ā£18000 per annum. How much would that cost the Exchequer? It is more sensible than cutting the standard rate of income tax or business taxes, although it might be a good idea to cancel the increase in corporation tax to 25%.
Needless to say, public expenditure must be limited. We shouldn’t be investing in Government services that are subsidised or free at the point of use, without first reducing the level of subsidy. Included in that category are health and social care expenditure, council house subsidy and railways. Under Universal Credit, individual benefits may be increased but not the cap, which could be reduced. We need to show that we really mean it when we assert that it should pay to work,