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@binners - I'm not so sure, the 80s was all about killing the unions by letting large industries go to the wall, hence the unemployment.
I fear that the current situation is worse as the current shower are so incompetent (and instinctively non-caring) that they have no idea what to do to help the economy. Their instinct will be to attempt hold onto power by stoking divisions (culture war, Brexit/EU etc) rather than governing.
You also have to factor in this is a world wide issue, not just the UK, a lot of nations are seeing rises due to the Ukraine situation.
The weird thing is you'd think that the whole 'Brexit' thing would allow the UK to deploy a lot more insular policy to counter a lot of the longer term issues, all the hype they gave us about being our own masters, but none of it being put into action kind of tells you the faith they had in their own argument!
Not often that me and Daz agree
Give over we agree on almost everything apart from one elderly bloke with a beard. 😄
Inflation is, indeed a global issue just now, but will any government anywhere want to curtail it? Just how much government borrowing has gone on to fund Covid (*cough* giving your mates billions of pounds *cough*) over the last couple of years?
It will be precisely in all governments worldwide interests' to inflate the debt away.
It will be precisely in all governments worldwide interests’ to inflate the debt away.
On the surface yes, but removing the debt is a scam. The real motivation is implementing austerity, and the debt and inflation gives them the perfect excuse.
Butter alone (and we’re talking supermarket own label has gone from 90p (ish) to double that, last week the same thing cost me £1.85.
It definitely hasn't.
Butter has been around £1.45/£1.50 per 250g pack for the last few years. Tesco are currently listing salted butter at £1.75. Of course, we may be talking about spread, not butter but I doubt there's been a doubling in the price of spreads. (Not the ones we buy anyway..)
I've seen roughly a 20% increase in our shopping spend.
The weird thing is you’d think that the whole ‘Brexit’ thing would allow the UK to deploy a lot more insular policy to counter a lot of the longer term issues
You can't make yourself insular overnight!
We are world beating at something.
https://www.theguardian.com/business/2022/may/18/why-uk-highest-inflation-g7-ukraine-covid-brexit?scrlybrkr=51b11b93#:~:text=Britai n's%20inflation%20rate%20has%20soared,the%20US%20and%20Germany's%207.4%25.
You can’t make yourself insular overnight!
putin had a good go…
Lol yes, quite!
I think the point is re the UK specifically is that we're facing a labour shortage and other issues that the EU aren't so much, so we're in a worse position to deal with the inflation.
From the the Gardian link.
Spain and Belgium have cut VAT on energy bills
Why do we keep getting told only the UK can do this because of Brexit ?
Even though they will not.
Why do we keep getting told only the UK can do this because of Brexit ?
Anything we want the government to do which they don't want to is 'because of the EU' and probably will be decades after we've left...
We can't help the poor, the EU won't let us.....
I’ve seen roughly a 20% increase in our shopping spend.
On Monday I shopped at Asda, came to £120.
Asked the checkout lady to see if there was anything obviously wrong, nothing.
We remarked/joked that it wasn't long ago that you'd only spend £120 on a 'Christmas' shop, not just a shop.
Only 2 of us and nothing particularly expensive on the bill, just lot's of items that'd increased.
If we're noticing the increases, there's going to be a lot of folk in serious trouble.
On Monday I shopped at Asda, came to £120.
Shopping for 5 of us at ALDI, including one coeliac who needs about £20 of gf foods a week, and our weekly shop has tended to be approx £100, including a bottle of wine or two. Recently it's more, but not yet £120 a week. We haven't changed what we've been buying. Maybe some brands or shops are increasing their prices more than others? (Mostly, the gf food comes from Asda, but that's not changed price massively.)
The claim that it is a world-wide phenomenon is a cop out. The UK has the highest inflation in the G8 and the Times claims most of it is down to inflated energy prices which the Tories will do nothing about as it will be seen as 'anti-business'. Inflation is about the redistribution of income, it is political. If money can be found for bombs, boats, beanos and bimbos it can be found to reduce the effects of inflation. Choices innit.
OK, I will go along with the rerun of 1980's theory for a moment. So, how are the government going to contract the economy? Surely, it would be by increasing taxes and interest rates (as they did in the 1980's). The argument is that higher interest rates reduce spending (in all sectors), which then reduces demand and therefore prices stop rising so quickly.
I just don't think 1% interest rate is enough to combat 9% inflation. I also don't see how unemployment will rise as a result of the current situation - I don't think monetary policy is powerful enough to affect the labour market in that way.
Interest rate rises are more about signalling to the market that the BoE is serious about inflation. As you say, a 0.5% rise makes no real difference day to day esp to supply side problems.
I also don’t see how unemployment will rise as a result of the current situation –
Esp post Brexit where we have effectively stopped market forces encouraging cheap labour to migrate to the UK.
I think the point is re the UK specifically is that we’re facing a labour shortage
Could be. What we constantly seem to suffer is a “willing to pay the price for labor” shortage. Given some of the risible suggestions from some recruiters I’ve seen and heard of I am unsurprised there is a reported labor shortage.
I’ve seen roughly a 20% increase in our shopping spend.
Same here. There was a lady being interviewed on the news who said her weekly shop had gone from around £40 to over £120. I could only think that she must have changed from Asda to M & S
What we constantly seem to suffer is a “willing to pay the price for labor”
Right but companies' costs have gone right up so where do they get the extra money from t pay these great salaries?
I'm but justifying it but it's all linked.
Apparently there are now more vacancies than unemployed*. Unfortunately a lot of the jobs are low pay low skill jobs as well as some semi skilled ok pay jobs the eastern Europeans were doing. As predicted there aren't the number of indigenous unemployed people with enough basic skill or work ethic to replace the Europeans immigrants. Go Brexit.
*Not the same metric as unemployment in the early 80s.
So, how are the government going to contract the economy?
By doing absolutely nothing. Yes, 1% on interest rates isn't enough to cause a recession on it's own, but it's enough to erode business confidence and reduce investment. Combine that with the the collapse in demand and you have the worst of all worlds, and the govt are not doing a thing about it. When the drop in consumer spending combines with high energy and raw material costs and failing confidence businesses are going to go to the wall on a massive scale, losing millions of jobs.
I also don’t see how unemployment will rise as a result of the current situation
Companies will relocate. When you can’t get key workers, you go to where you can get them. Taking the other jobs that could be more easily staffed here with you. A workforce isn’t just about numbers, and that applies to the economy as whole, not just individual companies. Add in the cost of trading here compared to elsewhere… and suppressed domestic demand… and the government will soon be dangling the “low tax light regulation” carrot in front of large businesses to keep them, and their jobs, here.
In Spain the vat on electricity has been reduced to 10%. Fuel has a 20 cents per litre applied at the till, yesterday I paid 1.71 e a litre diesel post discount, 1.44 GBP.
For electric there's a social tariff, for people who can prove they 're really struggling, it's about half the normal tariff.
Pointless anecdote but here I go:
Last Thursday evening MrsMC and a friend went to the big "family dining" pub in the village, and came back saying it was really quiet, people must be tightening their belts as costs rise.
I did the clubs pub ride last night that finishes at the same pub. It was busy. All the tables inside taken, half the outside full as well, mainly families with kids all over the playground. We had 25 riders there, we took all the remaining seats.
Maybe people are being cautious but not being forced to cut back just yet?
Maybe meals are more 'discretionary' whereas beer is an essential.
LOL! Let's all get pissed and pretend all is OK!... 🙂
[b]Retail sales jump in April driven by cigarettes and alcohol[/b]
https://www.bbc.co.uk/news/business-61519378
In Spain the vat on electricity has been reduced to 10%.
VAT on domestic energy in the UK is 5%, so even if all VAT was removed the change wouldn't be much.
Inflation generally corrects itself over the medium term - and economies often move into deflation.
Inflation could easily be limited currently by removing VAT / DUTY on fuel / energy. (Remember we can control our own VAT post Brexit? LOL)
Those that do have money, have plenty, those who had little enough before now have nothing
This is true. Some people will always have plenty of money irrespective of conditions. People with too much cash suck up too many resources - limiting them for the rest of us and contributing to inflation. This is why you need tax at the top end.
Beware of the establishment fools (Mervyn King, Bailey 600,000 salary, John Redwood - who's own government authorised the Covid spending - go figure) blaming inflation on printing too much money. These utter idiots are preying on the idea right-wing simpletons believe there's a surplus of five pound notes in people's pockets. And want to suppress wages for the lower-paid.
A few points currently doing the rounds.
1) We don't actually print money for the most (apart from 3% which makes up notes and coins.)
2) BoE/Government issue money digitally for the rest. Not print. Mark-up accounts.
3) Idiots are referring to Q/E (Quantitative Easing) - which is buying bonds with BoE money financed by new money creation as 'printing money'.
4) Q/E in the case of covid supported the government spending of 400 billion. I.E The government matches spending with bond issuance. And the bonds are purchased back by the BoE. It's a farce but it serves a purpose and injected money into the economy for covid support - which REPLACED income for the most. Because the private sector would have collapsed. This is not a driver of CPI inflation.
5) Q/E is not necessary for government spending (and has historically caused some asset inflation but 'covid era Q/E' is different to previous 2009 onwards Q/E) but this is the way the BoE/Government work to try and keep things stable.
Governments always create new money when spending irrespective of Q/E.
6) The act of "Money printing" can't cause inflation because something has to be done with the money. So if that new money was matched to resources and employment then there is no surplus money. In the case of covid it replaced wages so more money didn't necessarily end up straight into the economy any more than normal. Bear in mind lots of business didn't get help and had to close.
The failing of the right-wing to say BoE 'money-printing' causes inflation is to never blame commercial banks for lending too much money, and thus causing inflation. It's always government spending causes inflation according to the small-state brigade.
They are either economically illiterate or pushing the myth that the state doesn't have money of its own.
It does. The £5 in your pocket is evidence of that.
I can’t see this continuing without some sort of ‘adjustment’ along the lines and I’m pretty sure the worst off will be hit the hardest like hospitality and retail workers in less affluent areas. Brexit, a declining domestic market and skills shortages are going to make the UK less attractive to investors, combined with poor productivity and complete lack of Government policy or action - ‘letting the market decide’ isn’t really a good strategy when you’re competing in a global marketplace unless your aim is reduced employment rights, selling-off public owned assets and not giving a $hit about the long-term consequences. I can see a significant exodus of young people and talent in the near term as a shrinking economy means rising prices, static wages and fewer opportunities.
Would banning the now ubiquitous "inflation plus 5%" clauses in contracts help to control the problem?
Inflation could easily be limited currently by removing VAT / DUTY on fuel / energy.
Wouldn't that do the opposite? Inflation will continue until prices peak at an unsustainable level and demand falls. Granted, energy is a bit different as you have no choice in whether you use it or not, but artificially lowering prices will mean people relax and stop trying to limit their usage as much.
Wouldn’t that do the opposite? Inflation will continue until prices peak at an unsustainable level and demand falls.
The current increase in inflation is on the supply side, mostly due to higher fuel prices. Bring down those prices and inflation comes down with it (assuming the reduction is passed on, which would need to be enforced). It's got nothing to do with the demand for fuel, which hasn't really changed.
Just seen Mervyn King on the news. Is he an idiot or is he pushing some sort of agenda? Pretty much every economist and commentator agrees that this bout of inflation is supply side driven, mostly through fuel and energy prices, and some other raw material and supply chain issues caused by covid, brexit and Ukraine. So why is he on the news prattling on about too much money in the economy and not enough goods? I refuse to believe he's an idiot, he ran the BoE FFS! So why make himself look like one?
Conversely I’m trying to give more trade to the small cafes and coffee shops in my town.
Jeez. Round here every other retail space is a coffee shop or cafe/artisan bakery. Even the old fire station got converted into a bakery. That must've cost ££££££! There needs to be a good cull. I don't understand the appeal. I would've guessed they were all claiming lottery money grants or or were money laundering for drugs sales, but sure enough, go out at the weekend and there are queues snaking out of these places with people eager to spend their money - on coffee. It's remarkable. I love coffee too, but it's never occurred to me to buy it when I'm out of the house, never mind as a leisure activity.
Just seen Mervyn King on the news. Is he an idiot or is he pushing some sort of agenda
I refuse to believe he’s an idiot, he ran the BoE FFS! So why make himself look like one
Are you unfamiliar with his previous work? He’s consistent. Consistently wrong about pretty much everything.
In common with the present cabinet, he’s subject to the ‘turtle on a fence post’ theory.
What the **** is that doing there? It clearly doesn’t belong there? How on earth did it get there?
He’s an absolute clown!
I love coffee too, but it’s never occurred to me to buy it when I’m out of the house, never mind as a leisure activity.
Never been on a cafe ride?
I go on two every week and met a friend for breakfast in a cafe one morning before work - so three teas (don't do coffee), two lunches and a smashed avocado / poached egg breakfast...
As predicted there aren’t the number of indigenous unemployed people with enough basic skill or work ethic to replace the Europeans immigrants. Go Brexit.
Or, we could sort out the housing issue which as always if you dig into any issue is the root problem. "indigenous" people can't afford to do these jobs because they don't pay enough to pay a grand a month for an unsecured tenancy on a flat or a £250k mortgage or whatever it is these days for a poxy terrace house. It's ok for European migrants to work hard for five years living thirty souls to a room in a HMO, sending all the money back home. Good for them! But don't wheel out the old wah wah wah Brexit/everyone's a racist/British people are workshy bullshit please.
Never been on a cafe ride?
I go on two every week and met a friend for breakfast in a cafe one morning before work – so three teas (don’t do coffee), two lunches and a smashed avocado / poached egg breakfast…
A what now? 🙂
No, never have. I used to go in a 'caff' occasionally but it was the type full of fag smoke and generally all about a cup of tea. And usually because it was too early for the pub.
People go to pubs to drink alcohol? Why not just drink it at home? I didn't realise it was some kind of leisure activity 😉
I know right. That's what I said - that I didn't realise it was a leisure activity.
I've known about pub drinking being a leisure activity for a long time. Indeed, it was prevalent amongst the older types when I was a yoof. So I know about that. But congregating to drink coffee? No. I mean, I saw 'Friends' in the early 90's but assumed that they met there because it was at the foot of their apartment block... but anyway, they're American, it was decades ago. And also, fictitious.
I definitely have more social coffee catch ups than pub catch ups, by quite some margin too.
Dont fancy a coffee crawl much mind you.
These coffee shop meet ups?
I’m presuming this is a morning thing?
Surely nobody would do that after midday, once the pubs are open?
I believe they have seats in Greggs, i could meet you half way.
Always up for a pasty party! 😃
Surely nobody would do that after midday, once the pubs are open?
Prepandemic me and a mate used to meet in the coffee shop on a Friday afternoon for a coffee.
Admittedly that was after leaving the tap room but surely it still counts?
These coffee shop meet ups?
I’m presuming this is a morning thing?
Surely nobody would do that after midday, once the pubs are open?
Someone mentioned doing it before work. So I presume that's about 11am. Because surely no-one is perverse enough to get up earlier than they absolutely need to if they start work before that