UK has no alternative to interest rate rises - Hunt

[SirGalahad]

UK has no alternative to Bank interest rate rises to calm inflation - Hunt

Chancellor says he "unstintingly" supports the Bank of England to "do what it takes" to cut inflation.

www.bbc.co.uk

If the UK has no alternative then the economy has been mismanaged - simple.

The UK has "no alternative" but to hike interest rates in a bid to tackle rising prices, the chancellor has said.
Jeremy Hunt said inflation - the rate at which prices rise - was the "number one challenge we face".
He said the government would be "unstinting in our support" for the Bank of England "to do what it takes" to slow inflation.
Rising interest rates and mortgage costs weighed on UK economic growth in April.
While the economy grew by 0.2%, the Office for National Statistics said that housebuilders and estate agents had a "poor month".

So unpack this.

What is causing inflation? Is it rising prices so cost push or rising demand so demand pull (there is too much money in the system).

Hunt says there is excess demand and therefore needs to reduce this by increasing interest rates and reduce spending power just as people are facing a cost of living crisis.

Why is UK inflation so high?

Britain's unwanted status as the only large advanced economy still to have double-digit inflation represents just one symptom of the serious economic malaise faced by the country.

www.reuters.com

Weakening of the pound hasn't helped.

Britain's unwanted status as the only large advanced economy still to have double-digit inflation represents just one symptom of the serious economic malaise faced by the country.

 

[SirGalahad]

Five pounds ($6.21) in Britain today will only go as far as four pounds did in 2019 - a rate of inflation unmatched by other Western European countries over the same period.

 

[Ivor Windybottom]

The issue has been 15 years of ridiculously low interest rates, together with money-printing, started by Gordon Brown "saving the world"* and continuing with the tories. This has led to people taking on unsustainable levels of debt and the inflation we're now seeing.

There is nothing new about the sort of interest rates we now have, we are just getting back to normal.

I'm looking forward to getting a reasonable interest rate on my savings. Historically, it should be higher than inflation, this incentivises the prudent to save.

Some people are in for a shock though - we're going to see who the genuinely wealthy are, and who is posing about on borrowed money. When the tide goes out, you get to see who's swimming naked.

* https://en.wikipedia.org/wiki/We_not_only_saved_the_world

 

[SirGalahad]

The issue has been 15 years of ridiculously low interest rates, together with money-printing, started by Gordon Brown "saving the world"* and continuing with the tories. This has led to people taking on unsustainable levels of debt and the inflation we're now seeing.

There is nothing new about the sort of interest rates we now have, we are just getting back to normal.

I'm looking forward to getting a reasonable interest rate on my savings. Historically, it should be higher than inflation, this incentivises the prudent to save.

Some people are in for a shock though - we're going to see who the genuinely wealthy are, and who is posing about on borrowed money. When the tide goes out, you get to see who's swimming naked.

* https://en.wikipedia.org/wiki/We_not_only_saved_the_world

It didn't start with Brown but do carry on, what is normal? Based on what evidence?

Gordon Brown became chancellor in May 97 and ended in June 2007 - rates were 6.25 May 97 and June 2007 5.5

 

[SirGalahad]

The recession in 2007 was caused by predatory lending to home owners - caused by banks.

 

[Justin Passing]

UK has no alternative to Bank interest rate rises to calm inflation - Hunt

Chancellor says he "unstintingly" supports the Bank of England to "do what it takes" to cut inflation.

www.bbc.co.uk

If the UK has no alternative then the economy has been mismanaged - simple.

The UK has "no alternative" but to hike interest rates in a bid to tackle rising prices, the chancellor has said.
Jeremy Hunt said inflation - the rate at which prices rise - was the "number one challenge we face".
He said the government would be "unstinting in our support" for the Bank of England "to do what it takes" to slow inflation.
Rising interest rates and mortgage costs weighed on UK economic growth in April.
While the economy grew by 0.2%, the Office for National Statistics said that housebuilders and estate agents had a "poor month".

So unpack this.

What is causing inflation? Is it rising prices so cost push or rising demand so demand pull (there is too much money in the system).

Hunt says there is excess demand and therefore needs to reduce this by increasing interest rates and reduce spending power just as people are facing a cost of living crisis.

Why is UK inflation so high?

Britain's unwanted status as the only large advanced economy still to have double-digit inflation represents just one symptom of the serious economic malaise faced by the country.

www.reuters.com

Weakening of the pound hasn't helped.

Britain's unwanted status as the only large advanced economy still to have double-digit inflation represents just one symptom of the serious economic malaise faced by the country.

So what's your suggestion, then, sonny?

 

[festive]

Food and Energy prices allow to sky rocket without Government intervention has contributed massively to our current inflation issues. I've not seen this government do a single thing to help us Joe Public, it's all taken up by infighting and mid slinging between the two main parties fuelled by the press. And then they hike corporation tax and kick out what Truss was doing which would have helped, i strongly believe and prefer trikle down to the thieving government blowing it on corrupt quangos They should all be routed.

 

[gant]

Food and Energy prices allow to sky rocket without Government intervention has contributed massively to our current inflation issues..

Price of diesel and petrol used to be the go to cause of price rises, wouldn't appear to the case this time given diesel and petrol are nearly on a par at £1 39p round these parts.

 

[fillyboy]

And then they hike corporation tax and kick out what Truss was doing which would have helped, i strongly believe and prefer trikle down to the thieving government blowing it on corrupt quangos They should all be routed.

Interesting you mention Truss, one of the reasons cited for her removal was her policies were going to bankrupt the country because they caused the cost of Govt borrowing to spike by increasing the interest rates on bonds/gilts.

As of this week the interest rate on those bonds is higher than after Truss's mini budget.

 

[Justin Passing]

Food and Energy prices allow to sky rocket without Government intervention has contributed massively to our current inflation issues. I've not seen this government do a single thing to help us Joe Public, it's all taken up by infighting and mid slinging between the two main parties fuelled by the press. And then they hike corporation tax and kick out what Truss was doing which would have helped, i strongly believe and prefer trikle down to the thieving government blowing it on corrupt quangos They should all be routed.

What intervention would you wish for?

 

[SirGalahad]

Food and Energy prices allow to sky rocket without Government intervention has contributed massively to our current inflation issues. I've not seen this government do a single thing to help us Joe Public, it's all taken up by infighting and mid slinging between the two main parties fuelled by the press. And then they hike corporation tax and kick out what Truss was doing which would have helped, i strongly believe and prefer trikle down to the thieving government blowing it on corrupt quangos They should all be routed.

It;s great you believe in trickle down economics based on supply side economics and the debunked laffer curve.

We saw some under Truss - look what happened.

Might as well believe in fairies.

 

[ellal]

And the 'great reset' carries on apace...

First they came for the poor...
Then they came for the not so poor...
Now they are coming for the moderately well off...

It won't be long before the rich turn on themselves...

Kind of like rats!

 

[Mottie]

Price of diesel and petrol used to be the go to cause of price rises, wouldn't appear to the case this time given diesel and petrol are nearly on a par at £1 39p round these parts.

In the Tesco near me, petrol is 142.9 and diesel is 141.9. Haven’t seen diesel cheaper than petrol for ages.

 

[Mottie]

And the 'great reset' carries on apace...

First they came for the poor...
Then they came for the not so poor...
Now they are coming for the moderately well off...

It won't be long before the rich turn on themselves...

Kind of like rats!

So they came for you first - no wonder you're so bitter!

 

[SirGalahad]

So what's your suggestion, then, sonny?

Always the retort of right wingers - they can't defend their policies after having been in power.

We have low productivity and growth.

Shift taxes away from income to capital such as Land Vale Tax - it will mean capital starts chasing investments that are not in property.

This from the left wing FT.

" The country skimps on investment; total investment was the lowest in the G7 over the four decades preceding the pandemic. As a result, energy and transport infrastructure is run down."