Pessimists have been forecasting that Britain will suffer a nasty dose of stagflation – a shrinking economy combined with high inflation.
They can at least stop worrying – it’s here.
Today’s figures show that the economy was down 0.2% in December while inflation stood at 5.4%.
It is no wonder the view from the shop floor, and from the Dog & Duck, is gloomy.
Economists say that fall in GDP is temporary, and it was only a small fall in the first place, let’s be clear.
But the inflation is here to stay and that is surely the more worrying factor. The price of seemingly everything is up and the squeeze in incomes is getting tighter.
Let’s assume the economy grew somewhat in January and does the same in February and March.
Then what? The UK economy has shown great resilience in the face of the pandemic but it is getting harder to be optimistic. It feels like Omicron might have been one punch-in-the-head too many and that a teetering slugger might finally fall over.
There is only one solution to that, more government support. Especially since the Bank of England feels it has no choice but to both put interest rates up and reduce quantitative easing.
The Conservative Party seems to have got in a tizz over its planned April tax rises, as if they were a matter of principle.
Individuals paying tax might well be just that. Government imposing them is a matter of practicality rather than morality.
It appeals to notions of common sense to say that we can’t keep kicking the day of reckoning down the road, that at some point we just have to front up and pay the bill.
But not only can we delay it, we do, all the time.
One more kick please. Let’s get to the summer and have another look.
