A note from the land of optimistic fantasy: “Bailey and Hunt urge wage restraint in joint pledge to conquer inflation.”
That’s the headline in this morning’s FT.
Back in the real world, figures today just how far off that is from reality, and how absurd it is to imagine anyone is going to turn down a pay rise, including the 537 Bank of England staff the annual report shows earn more than £100,000.
Pay is rising at a record annual rate of 7.3%, although since that is still below inflation it can hardly be said that worker Jo (and worker Joanne) are enjoying a reckless spending party.
Bank of England governor Andrew Bailey, increasingly looking like a man grasping at straws, says the reason inflation remains far too high is the surprising resilience of the UK economy. In other words: We’ve done better than he thought. So the beatings must continue until we have all grasped the severity of the situation.
He and the Chancellor don’t want a recession, they say. But all other tics suggest they think that is the only way to get inflation back to a 2% target that was always an arbitrary goal in the first place.
No one wants to see “unemployment higher or growth weaker”, claims Bailey, even while giving every indication that is exactly what he wants.
The Bank has got itself into an almighty fix here.
It’s old line, that inflation was due to global issues far outside of its control, made more sense than the present one – that it is taking a tough line to save us all from our spendthrift ways.
Outside of Threadneedle St, the idea that we are basking in a spending boom driven by waves of cash is comical bordering on insulting.
If the language were at least different, that would be something.
