The economy is showing warning signs as inflation jumps – ahead of Reeves’s Budget changes which aren’t due to come into effect for another month-and-a-half.
Businesses are facing extra taxes and a big hike in the amount of National Insurance they will have to pay, meaning they are likely to lay off large numbers of workers and raise prices – meaning a rise in inflation.
Economists at the Bank of England expected that, and factored it into their forecasts, saying they expected inflation to hit 3.7 per cent, between July and September – but this would be only a “bump” before it settled back to two per cent.
But this was based on an expected January inflation rise from 2.5 per cent to 2.8 per cent. The extra 0.2 per cent rise seems to be sending the usual hotheads into a panic.
Buy Cruel Britannia in print here. Buy the Cruel Britannia ebook here. Or just click on the image!
It means they cannot be sure that their forecasts will be borne out, meaning the measures they have planned to accommodate a temporary rise may not work.
The Bank of England, for example, will be reconsidering its plans for interest rates; it was going to bring them down, giving relief to mortgage-paying homeowners. Now it may have to raise them instead.
And while the effect on those in work is minimised by the fact that – even with the higher inflation rate – wages rose by 2.9 per cent more in the year or so until now, people who don’t have a job will be less able to pay their way than they were before.
Benefits are habitually set lower than the cost of living in order to make those receiving them struggle to make ends meet – and the government has said it wants to reduce the benefits bill.
This is short-sighted and silly because, in a recession such as that which Reeves seems to be causing, benefit money from the government helps to keep the economy ticking over; people receiving benefits have to spend their money into the economy, just to stay alive.
With large-scale redundancies approaching fast, the government is facing a large increase in the benefits bill, while soon-to-be former employees are facing a large fall in their household budgets, meaning they will have to make sacrifices in order to survive.
You can see where this is going: With less being spent into the economy, businesses will go to the wall. This is going to be a difficult year because Reeves has deliberately made it that way.
There is a solution, of course – and it is one that, for a Labour Chancellor, would seem obvious. But Reeves doesn’t want to do it because she isn’t – really – a Labour politician at all.
The answer is to tax the rich on their assets. But Reeves would rather see millions of people starve than one rich person lose one per cent of their wealth that they won’t even notice.
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The Livingstone Presumption is available
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Health Warning: Government! is now available
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The first collection, Strong Words and Hard Times,
is still available in either print or eBook format here:
Warning signs as inflation jumps – AHEAD of Reeves’s Budget changes
The economy is showing warning signs as inflation jumps – ahead of Reeves’s Budget changes which aren’t due to come into effect for another month-and-a-half.
Businesses are facing extra taxes and a big hike in the amount of National Insurance they will have to pay, meaning they are likely to lay off large numbers of workers and raise prices – meaning a rise in inflation.
Economists at the Bank of England expected that, and factored it into their forecasts, saying they expected inflation to hit 3.7 per cent, between July and September – but this would be only a “bump” before it settled back to two per cent.
But this was based on an expected January inflation rise from 2.5 per cent to 2.8 per cent. The extra 0.2 per cent rise seems to be sending the usual hotheads into a panic.
Buy Cruel Britannia in print here. Buy the Cruel Britannia ebook here. Or just click on the image!
It means they cannot be sure that their forecasts will be borne out, meaning the measures they have planned to accommodate a temporary rise may not work.
The Bank of England, for example, will be reconsidering its plans for interest rates; it was going to bring them down, giving relief to mortgage-paying homeowners. Now it may have to raise them instead.
And while the effect on those in work is minimised by the fact that – even with the higher inflation rate – wages rose by 2.9 per cent more in the year or so until now, people who don’t have a job will be less able to pay their way than they were before.
Benefits are habitually set lower than the cost of living in order to make those receiving them struggle to make ends meet – and the government has said it wants to reduce the benefits bill.
This is short-sighted and silly because, in a recession such as that which Reeves seems to be causing, benefit money from the government helps to keep the economy ticking over; people receiving benefits have to spend their money into the economy, just to stay alive.
With large-scale redundancies approaching fast, the government is facing a large increase in the benefits bill, while soon-to-be former employees are facing a large fall in their household budgets, meaning they will have to make sacrifices in order to survive.
You can see where this is going: With less being spent into the economy, businesses will go to the wall. This is going to be a difficult year because Reeves has deliberately made it that way.
There is a solution, of course – and it is one that, for a Labour Chancellor, would seem obvious. But Reeves doesn’t want to do it because she isn’t – really – a Labour politician at all.
The answer is to tax the rich on their assets. But Reeves would rather see millions of people starve than one rich person lose one per cent of their wealth that they won’t even notice.
Vox Political needs your help!
If you want to support this site
(but don’t want to give your money to advertisers)
you can make a one-off donation here:
Be among the first to know what’s going on! Here are the ways to manage it:
1) Register with us by clicking on ‘Subscribe’ (bottom right of the home page). You can then receive notifications of every new article that is posted here.
2) Follow VP on Twitter @VoxPolitical
3) Like the Facebook page at https://www.facebook.com/VoxPolitical/
Join the Vox Political Facebook page.
4) You could even make Vox Political your homepage at http://voxpoliticalonline.com
5) Follow Vox Political writer Mike Sivier on BlueSky
6) Join the MeWe page at https://mewe.com/p-front/voxpolitical
7) Feel free to comment!
And do share with your family and friends – so they don’t miss out!
If you have appreciated this article, don’t forget to share it using the buttons at the bottom of this page. Politics is about everybody – so let’s try to get everybody involved!
Buy Vox Political books so we can continue
fighting for the facts.
Cruel Britannia is available
in either print or eBook format here:
The Livingstone Presumption is available
in either print or eBook format here:
Health Warning: Government! is now available
in either print or eBook format here:
The first collection, Strong Words and Hard Times,
is still available in either print or eBook format here:
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