The British government had to borrow from the Bank of England and spend to cope with the pandemic. The Bank of England had to print money like never before too. Much of that extra money was paying over-paid office staff to “work from home”. Now Rees-Mogg is trying to bully them back to the office. We mere mortals are entitled to ask how much work did they actually do at home and further, how much work do they actually do in the office? In Downing Street, it seems it was one long party for civil servants even at the height of the pandemic.
Savings soared during the pandemic as people avoided the shops and shopped more online for things they really needed. People couldn’t go out to the pub, they stopped eating out and office workers made their own coffee rather than going to Starbucks for their morning cuppa. They saved money and now they are really flush and spending money adding to inflation that is now running at 7% and heading towards 10% according to the Bank of England. Demand is now outstripping supply.
Oil is at 109.14 this morning. Demand increased as we came out of the pandemic. No one in government predicted this, so there was no build-up of oil stocks. Maybe those who should have predicted it was sucked in by Boris’s frivolous attitude to governing this country. Natural gas is at an all-time high too. While the government was chatting about climate change and leaving oil in the ground, Europe had become reliant on Russian oil and gas. Then came the invasion of Ukraine, which after their invasion of Crimea was at least partly predictable.
Yesterday the British people went to the polls to vote in local elections. The results aren’t in but I suspect a swing away from the Conservatives to both Labour and Liberal Democrats. Why Liberal Democrats? The public hasn’t forgotten Corbyn and Momentum.
So, for 2 years people saved their discretionary income and now they are tending to spend it, pushing up inflation. The people on the lowest incomes had little discretionary income throughout the pandemic and so have no savings to buffer the soaring inflation they now face. Little Rishi could have helped them by extending the warm homes discount to all low-income groups but instead decided on a loan and that strange council tax payback plan. His response to soaring energy prices is as inept as his “eat out to help out” plan.
If during the pandemic, you invested your discretionary income to produce more discretionary income, you can now ride out the soaring inflation. However, you might resent the government’s incompetence when you were, in fact, competent in planning for the future. We must now pay the price for the pandemic and for government incompetence.