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Are you as confused as us?

June 23, 2022 12:58 PM

h529As Mr Johnson thrashes around randomly firing out policies that appeal to various sections of his party it is getting less and less possible to work out what the governments economic strategy actually is

Only a few months ago all the talk was of creating a high wage economy

Now, with the Bank of England forecasting inflation growing to 11% later in the year Ministers talk instead of the need for wage restraint to stop the creation of an inflationary spiral. Striking railwayman are characterised as militant because they dont see an increase of 3-4% as acceptable representing as it does a major reduction in their spending power

That's unless you are a banker where , under the guise of "de-regulation" the government is actively considering removing the cap on bankers bonuses

Then the government suddenly announce that pensioners will receive an increase of over 10% this year adding £10bn to the governments expenditure spending bill.

Apparently because pensioners dont make things these extra costs are not inflationary as the costs will not feed through to higher prices of what they produce. The fact that a further £10bn of extra spend will be put into the economy chasing scarce goods is ignored even though this will clearly be inflationary

When you look at teachers, nurses etc however, the mantra is again pay restraint even though if you accept the governments logic any extra pay costs here will not feed through into the prices of what they produce

Its all nonsense of course.

What the government has done is make a political choice which is to spend £10bn on protecting pensioner income whilst hoping to make real cuts in the wages and salaries of those who pay the taxes which fund the pensions in the first place. When, earlier in the year there was a big debate about retaining the pandemic top-up of £1000 to those on Universal credit you will recall we were told that this was unaffordable. Now the money is there!

What is at work here is a clear political decision to favour a group who historically tend to be more likely to vote and when they do vote the vast majority have tended to support the Conservative. it is not a strategy to help address the cost of living crisis for those in work nor is it a strategy to help our economy grow. The same goes for the City which is now one of the Tories major sources of funding. Funny that!