Simon Clarke, Chief Secretary to the Treasury, tells businesses that wages should not keep pace with inflation because that would contribute to an inflationary spiral. And public sector workers have no chance of big pay rises.
Psst… we are already in an inflationary spiral which has got nothing to do with wages…..fuel, energy, wheat, cooking oil…..prices all going up because of greed and war, supply side restrictions, nothing that our government can do about it. Of course it’s worse for us because we pay for these things in $ mainly, and the £ is weak against both the $ and the €, but especially the $ . This will continue because even with the recent rise the interest rates here remain below the US. The Bank of England is worried that higher interest rates here will lead to……inflation.
So if we are not allowed decent pay rises what will help ordinary people? Tax cuts, changing tax thresholds, increasing benefits and the pension, changing thresholds for benefits. I think Sunak has said that pensions and benefits will go up a lot next year because they are tied to RPI (or is it CPI, I can’t remember or the difference between them), but there might well be a ‘we can’t afford it’ backlash…
In truth this is out of control of politicians and their economic advisors (economics must be the most bullshit discipline of all). They could make it a little less painful (charging VAT not only on the price of petrol, but also on the fuel tax already applied to petrol seems like double dipping. I’m just relieved that I don’t have to drive for work). But we are more likely to be told that we have to put our hair-shirts on, that pain is good for us. Not a message that Little Rishi Sunak with his personal stockpile of £750 million will have to apply to himself.
Rishi might have to resign soon anyway. Apparently Johnson is minded to reverse the planned rise in Corporation Tax which is the core of Sunak’s attempts to pay for pandemic spending.
Meanwhile, Priti Patel says that ECHR judges are racist.