So if people are going to cut back on spending and people are also asking for wage increases...

[cakeorwine]

People spending less is going to mean less money spent on services and goods. So companies make less money.

People ask for higher wage increases. Companies either don't have money to pay them (as people are spending less) or they increase costs of their goods so goods cost more.

Public sector workers ask for wage increases. Government and Councils increase taxes to pay for them.

Index linked benefits and pensions increase by inflation so Government needs to increase taxes / make cuts to pay for these increased costs.

AIBU to think this all a bit depressing?

Absolutely depressing. As a teacher, my wage has stagnated and been frozen so much over the past decade so I'm earning around 12% less than I would if my pay had risen in line with inflation. And I can't ask for a pay rise, either, because I'm at the top of the non-leadership payscale so there's nowhere for me to go unless leadership, which I wouldn't touch with a bargepole.

I think my family are going to be okay just with these rises, although time will tell. I really feel for all those for whom these rises are going to genuinely cause hardship. It's a horrible situation.

Yes, very depressing. It is a vicious cycle.

Index linked benefits and pensions increase by inflation so Government needs to increase taxes / make cuts to pay for these increased costs
At the moment I get £23.70 per week in DLA (Disability Living Allowance) this is because I had polio as a child and do not have full use of my right hand. I've had a letter and it is going to increase in April. it will then be £24.45. I am trying to work out what to apend the extra 75pence on.

These economic decisions are deliberate though, people vote for neo liberalism then seem to find it depressing. There are alternative economic systems but they aren't popular or pushed forward as an agenda. It needs disrupting but the people who have major skin in the current system game will fight tooth and nail to let it happen.

We run a small business, 10 full time employees.

Our fuel bills have already doubled, and this is before the so called price hikes. Our suppliers on average have increased prices by 15%, and the mimimum wage goes up to £9.50 in April which means that we'll have to increase everyone elses wage pro rata.

We're busy, but customers aren't going to pay the increases that we really need to charge so we're effectively screwed into making much smaller margins and that's only if people don't stop spending completely on mid to high end purchases. DH has run the business for 35 years, and I've been involved for the last 10. After Covid, we honestly thought we were starting to see light again but this..... I don't know how on earth we're going to manage.

I know that benefits and pensions are low @paul72

However - the overall cost is very high and they are linked to inflation which is looking like it's going to be 7%.

So that will just add to the costs - DWP spending was about 12% of UK GDP in 2020 / 21

No problem with the pensions and benefits increasing - I just wonder how Sunak is going to pay for it with people spending less?

The billionaires will keep getting rich though.

Benefits are going up by 3.1% in April. The govt are refusing to raise them by the rate of inflation.

I doubt very much whether public sector workers will be getting anything like 7% pay rises. My company won't be paying 7% payrise.

@Itsnotdeep

Benefits are going up by 3.1% in April. The govt are refusing to raise them by the rate of inflation.

I doubt very much whether public sector workers will be getting anything like 7% pay rises. My company won't be paying 7% payrise.

Is it just the pensions that are linked to inflation / average pay increases?

I thought all benefits were linked to inflation?

I see it's linked to inflation in September

www.gov.uk/government/news/state-pension-and-benefit-rates-for-2022-to-2023-confirmed

I wonder what will happen this September?

@Itsnotdeep

Benefits are going up by 3.1% in April. The govt are refusing to raise them by the rate of inflation.

I doubt very much whether public sector workers will be getting anything like 7% pay rises. My company won't be paying 7% payrise.

I work in the public sector and I haven’t had a total of 7% over the last ten years - probably no more than 3%, because our pay is frozen as soon as there are public spending squeezes - which is all the time under a Conservative government. DH and I are both public sector so we aren’t banking on getting any help towards the cost of living rise.

We are all fucked OP.. Those on benefits are going to be the most fucked. Those on low incomes will be very fucked. Public sector workers?! Pah!

Those who work in the private sector might get higher salary increases, but they are also more likely to have a buffer for the increased costs. It's ok if you can cut back on eating out, takeaways or holidays. Not so much if you are already living on the breadline and have nothing to cut back.

And if people are spending less, especially in a local community, and if council taxes are increasing, what the hell is that going to do for a local economy?

@cakeorwine

I know that benefits and pensions are low *@paul72*

However - the overall cost is very high and they are linked to inflation which is looking like it's going to be 7%.

So that will just add to the costs - DWP spending was about 12% of UK GDP in 2020 / 21

No problem with the pensions and benefits increasing - I just wonder how Sunak is going to pay for it with people spending less?

We need to spend to save.

Money was found for furlough fraud and dodgy PPE. Money can also be found to invest in the public, a stable cohesive and more prosperous society, and the (long term) economy.

I find reading some of the more reputable economic forecasts helpful. It’s by no means doom and gloom.

Mercer
KPMG
Deloitte

Mercer summary “ We are broadly positive on the economic outlook. Strong income growth coupled with healthy consumer balance sheets should support consumption. We are also seeing encouraging signs on the investment front with businesses engaging in capital-intensive projects. Governments, unlike after the Great Financial Crisis, are not planning to tighten their belts any time soon, with government spending and investment set to remain elevated. Against this backdrop, we believe that the global economy is well on track to recover to where it would have been had the virus never hit and perhaps to even exceed that level. Virus-related restrictions and energy price spikes might weaken growth for a couple of quarters but we expect growth to recover after things normalize, returning economies to their original trajectories towards full recovery.”

What about a pay freeze for all those in the higher tax bracket and pay rises to cover inflation for everyone else....

Decades of false economy short-termism is what has got us here.

Perhaps the single biggest thing that would help, is tackling the public health housing and homelessness emergency.

It costs the taxpayer many many billions - direct and indirect consequences.

Obviously high rents and mortgages mean less money in pockets to spend on the economy.

But also:-

• Billions on housing homeless families and vulnerable individuals in very expensive (but crappy) homeless accommodation.

• Billions on housing benefits for high rents

• Billions and billions and billions on the indirect consequences. Insecure housing and homelessness affects health (both physical and mental).

Likewise children's life chances, education and opportunities.

And also it's a major reason why increasing numbers of working age adults are unable to work due to ill health (Long Covid will add to this problem).

The public health housing and homelessness emergency leads to taxpayers spending billions on the NHS (including mental health), social services, and the criminal justice system.

@Hmmph

What about a pay freeze for all those in the higher tax bracket and pay rises to cover inflation for everyone else....

All this freezing, cutting, isn't the way to go about it.

We need to invest.

Invest in people and the long term economy.

Spend to save.

"Public sector workers ask for pay increases"

There is no mechanism for public sector workers to ask for or expect pay rises. It's pretty predictable that public sector pay will be frozen for a significant period yet again. Effectively another pay cut, particularly with high inflation!

As a public sector worker I an assure you I can only dream of an inflation rate pay increase. For the past 10 years where I work it has been 1.5% once, other than that a few 1%rises and many freezes with no pay rise. We also odbt get progressional so only get a payrise by taking a higher banded role.

I am not saying it isn't going to be shit at times, the pandemic has caused massive economic disruption to every nation in yhe world but please don't claim the British public sector workers are immune from inflation when you clearly don't understand how our pay has worked for the past decade.

Next weekend. I was going to the cinema and out for dinner. Before that we were going somewhere shopping for the day. Found out that our new bills will be. That has all gone out the window now. All those things we were going to do we are not. And I’m guessing lots of other people will not be doing as well.

We were going to be doing the garden up this summer. Most likely we will not be doing that either. Again. Another shop lost profits. Again I’m guessing we will not be the only one.
This is only going to end badly for everyone other than the people in charge or the super rich who are making money off our misery.

I hate them all.

Spend to save. Invest. It's the best way out of this mess.

@cakeorwine

And if people are spending less, especially in a local community, and if council taxes are increasing, what the hell is that going to do for a local economy?

This has crossed my mind too. I'm not on the breadline but the increased costs are coming out of my disposable income.

I'm putting more time between appointments at the hairdressers and beautician (pedicure and brows). Might start doing my own pedicure as it's a treat, rather than essential maintenance. I'm not buying coffees out anymore. My friends and I have started taking the kids out for free activities more than paid for activities. Takeaway is going from weekly to fortnightly. If enough people are cutting back then it will hit providers of non essential services and retail hard.

All this freezing, cutting, isn't the way to go about it.

We need to invest.

Invest in people and the long term economy.

Spend to save.

Pretty sure this is the only time I’ve ever agreed with you, @Tealightsandd!

but please don't claim the British public sector workers are immune from inflation when you clearly don't understand how our pay has worked for the past decade

I work for a charity. I know how crap pay is and I can only dream of pay rises linked to inflation.