As this is being written, in 2012, squeezed living standards have been the norm in the UK now for a good many years. The lastest news indicates apparently that the global downturn is taking the pressure off food and energy prices. Rental prices for housing are still edging upwards although purchase prices are subsiding, and it is only the […]
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 % […]
The highest rate of inflation among the original G7 members, is our UK inflation rate. Although there is much doubt about how representative the official figure is, no one really believes the official figure under estimates inflation. Over a decade after inflation and interest rate management was taken out of the hands of politicians this is an unexpected predicament. The whole logic of the hope of the 1990s was that the UK would have a sounder monetary system if politicians and their short-term agendas were taken out of this level of economic management. That was supposedly the lesson of experience overseas.
Had Lawson even had an experimental inflation index for even one of the regions or nations of the UK, he would have served the interests of our UK economies better than any shadowing of the D-Mark could have done. Gordon Brown could also have avoided the boom and bust too, had he had regional inflation indices alongside the national one. Both booms could have been reined in before they both led to the crises that squeezed our manufacturing industries so badly in recent decades.
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.
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.