Interest rates paid by UK households are however, already some of the highest in Europe. Despite all the talk of record lows you will hear from the mainstream media. Given how our economy has evolved, any monetary policy other than safeguarding domestic living standards makes less sense than ever before.
This current spiral in food and resource prices is international, and it this international spiral that has taken off. So has not now the time come to begin to re-think our policies ? So as to gear the UK for riding out this storm and others that will come along.
Inflation across the Eurozone at 2.2 % is now above the European Central Bank target of ‘2 % or less’. In the big European economies it is now approaching 2 % with little hope that it is going fall back any time soon. The current figures for the big EU countries this report tends to follow are: Germany 1.7 % […]
Our last couple of reports have focussed on the unexpected wave of inflation that is being felt around the world despite us supposedly being involved in a global downturn, and how the UK is particularly feeling it.
This month we are focussing on how other major G7 countries measure inflation as it impacts upon different parts of their countries and social structure. Something we want to see done here in the UK.
Rather than inflation in the UK being the result of a series of one-off occurances as Mervyn King insists, perhaps we are heading for a new world-wide era of Austerity. With inflation rather than deflation being the main global issue. What we have been promoting as our Regional Prosperity and Inflation Framework, might well have to serve as an ‘Austerity & Inflation’ Framework.
It looks like a trend has now firmly set in for us to be the inflationary economy which besides undermining our living standards will help overseas companies hold their grip on our home markets.
None of our current inflation indices register the unique house price inflation the UK has had. Had they done so in any manner comparable to Germany and the US, there would have been far higher inflation registered across the UK under New Labour. Looking at housing affordability indices gives us some idea of the seriousness of the real inflation being missed. And an index that shows this up region by region would show a revealing story for the West Midlands. We show what it would reveal.
The new government have inherited the highest inflation rate in the G7. And as they consider any sort of increase in VAT to pay off national debt they need to think about how they keep their finger on the national pulse as the country faces these challenges to their living standards. More like Ronald Reagan than Margaret Thatcher.