Is this the Everything Everywhere All At Once economy? City Editor Oscar Williams-Grut thinks so, and he makes a compelling case.
A pandemic in which the government turned the economy off and then on again with a consequence that consumers, for ages unable to go out and spend, suddenly crammed in as much as possible in the space of a few months. The virus meanwhile shrunk the workforce, thanks to a combination of Long Covid and people taking early retirement.
Then came the Russian invasion of Ukraine which sent energy prices into the stratosphere. And Brexit, naturally, which has hampered exports, contributed to the labour shortage and made the UK economy a generally less resilient edifice.
Inflation is the story of the day. To get an understanding of how high, at least by modern standards, 9 per cent is, consider this: prices rose by 2.5 per cent in April. The Bank of England’s target is 2 per cent *per year*.
Of course, inflation is not an equal opportunities offender. The Institute for Fiscal Studies points out that the poorest households face a significantly higher rate of around 11 per cent, because they spend a greater proportion of their income on energy and food.
Now the fun part: blaming people. Problem is, the UK is by no means the only country facing the scourge of inflation. So for whatever their foibles, it isn’t all Rishi Sunak and Andrew Bailey’s fault. But that’s not to say they are entirely lacking in agency.
The Bank of England could have raised interest rates earlier but chose not to. Perhaps because members of the Monetary Policy Committee thought inflation would be transitory. (Remember transitory?)
Or maybe they concluded that, while significant increases in the cost of commodities were coming, it was better to experience it as inflation rather than, say, tighter monetary policy, which would likely have led to lower economic growth or recession, higher unemployment and general hardship.
As for Sunak, his missed opportunity came at the Spring Statement. While he threw £9bn at the problem (including loans the government won’t call loans), benefits increased by only 3.1 per cent. That represents a massive real terms cut in the standard of living for those least well off. And, again, it was a choice.
Elsewhere in the paper, first more bad news: another tube strike. But bear with me, lots on the Elizabeth line, including the price of the Crossrail airport premium revealed plus a handy cheat sheet detailing how much quicker your commute will be once it opens.
In the comment pages, Transport secretary Grant Shapps says Crossrail shows Britain is leading the race again on rail. He shows tremendous restraint by government standards in not having a go at Sadiq Khan until roughly halfway through.
Meanwhile, Defence Editor Robert Fox points out that the war in Ukraine also means food chaos for the world. (Is it just me, or is the global impact feeling like a small preview of what a 1.5C+ world will wreak in the form of food shortages, inflation and mass displacement of people?)
And finally, God Save the Queen. 70 years of stoic service plus a four-day bank holiday is quite the legacy. But how will you be celebrating? Reveller Editor David Ellis has your must-read guide for planning your own right-royal knees up.
