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?

@Hmmph

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

Who's going to implement that in the private sector?

@ShallWeTalkAboutBruno

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!

First time for everything.

It’s not as simple as that though OP, there’s more than one way to skin a cat. It is depressing but fixable. It has to be.

I work for a council, the wastage is eye watering. Some one needs to get a grip of this and pay closer attention to budgets and where money is spent. Last year the dept I worked for needed to spend its budget and it was pissed up the wall. I imagine this is happening all over and I believe same for NHS.

There needs to be a change of mindset, big business needs to pay tax properly. The mc only have so much to give.

Individuals need to buy less but pay more for quality goods.

I wouldn't not ask for a pay rise because Mr 'I earn over half a million a year' says so. Every one should ask for a pay rise, prices will still go up no matter what but if you haven't asked you'll be worse off than all those that didn't ask and didn't get. (Although I realise there's plenty who won't get even if they ask, I'm one!).

@Paranoidandroidmarvin it sucks, but in some ways you're lucky - cutting back on the cinema and holidays. Not everyone has that option.

Interest rates have also increased - mortgage payments and rents are likely to go up too this year.

I work for a council, the wastage is eye watering. Some one needs to get a grip of this and pay closer attention to budgets and where money is spent

I thought every Government and Council for the last 30 years has been cutting down on waste?

I guess there's more to go.

Interest rates have also increased - mortgage payments and rents are likely to go up too this yea

This to.

@Tealightsandd

The billionaires will keep getting rich though.

Yup, and that's what is really depressing about this.

I honestly think it's going to come down to people just not paying their bills. Someone will definitely come up with a better solution then when there's no more money to suck out of the working and middle classes.

We have already cut back since lockdown 1, we used to have teas/ cakes out at least once a week, take away once a month etc . Not being able to do these opened our eyes to how much we were spending / wasting money on. So now we take a flask of tea and our own cakes out with us and only have a take away once every other month. Shopping is no longer enjoyable we just order everything on line now as we find local stores no longer have the stock so we end up ordering online anyway. It’s sad there are less and less shops on the high street as they are going under but this just gives you less insentive to go up the city in the first place.

Im on a pay freeze. Before my DH left the civil service, he had been on a 5 year freeze.

Public sector workers ask for wage increases.

That's not how it works. Basically huge national organisations and unions negotiate pay rises with different public sector employers.

I have been working in the public sector for almost 20 years. Half of those 20 years I had a pay freeze. In the last 12 months my pay rise has been... zero. I have never had a pay rise that matched inflation, not once.

You cannot blame the state of the economy on public sector workers "asking for a pay rise"

@cakeorwine

I work for a council, the wastage is eye watering. Some one needs to get a grip of this and pay closer attention to budgets and where money is spent

I thought every Government and Council for the last 30 years has been cutting down on waste?

I guess there's more to go.

It's not about cutting the amount of cash available for the budget because that just destroys public health systems etc, it's changing how the budget is managed.

Austerity is ideological - it is terrible economics -and it is responsible for destroying societies and economies. E.g. western nations imposing austerity on developing nations in the 70s is responsible for destroying their public health systems and creating the poverty and public health issues now causing such devastation.

That was all a choice.

In terms of the example you responded to, I think you have misunderstood. At present if you don't spend all of your allocated budget one year - perhaps because of delays to a project - then you receive a smaller budget next year (which means you won't then be able to complete that project at all or deliver key services). Which leads to people spending money on non-ideal things to use up their whole budget in order to secure the funding to carry out critical services the next year.

The whole system is dysfunctional.

You cannot blame the state of the economy on public sector workers "asking for a pay rise

That's not what I am doing. I am saying that one of the factors that could affect Government spending in the next year / two years is public sector workers getting pay rises either linked to inflation or somewhere in that region (which is probably not going to happen)

It's the 'future economy' in the next few years I am thinking about - with inflation at this high rate along with a cost of living crisis affecting spending and Government income.

2 parent family, both working full time, 1 gainfully self employed & still need benefits to get by.

Savings 20% of what they were this time last year.

Can't get a mortgage despite not missing rent ever & constantly told by the media about house prices rising.

The country is hugely flawed.

@Tealightsandd

The billionaires will keep getting rich though.

Funny that

Most private sector companies don't give their staff pay rises simply "because they ask for them".
They don't give their staff pay rises to be nice, and they don't give their staff pay rises solely because the cost if living goes up.
They give pay rises when there is a business case to do so.
So I have no idea wtf it has to do with the governor of the bank of England.
He'd be the first to justify HIS high salary as being necessary for attracting the right talent to the important job.
Well, it's the same with other jobs.
If there is a shortage of workers in a particular industry, the best run businesses will offer higher salaries to recruit the staff they want.
It's often unfair, there are all kinds of problems, and it doesn't work perfectly. But that's how it goes.

Separately, the idea that all employees have to do is ask for a pay rise and it will be granted is hilarious.

I'm private sector and I have never had the power to say "I want this pay rise" and it actually be granted.

@formalineadeline

Separately, the idea that all employees have to do is ask for a pay rise and it will be granted is hilarious.

I'm private sector and I have never had the power to say "I want this pay rise" and it actually be granted.

Hey, we're living in time when the employee is king, there are plenty of jobs in demand and low unemployment.

Or am I misinformed?

Op, you do understand that government spending is not in any way comparable to a household budget, right?

That was propaganda / misinformation fed to people to get them to accept the ideology of the time.

Or am I misinformed?

Yes. Or stirring.

@formalineadeline

Or am I misinformed?

Yes. Or stirring.

Benefits are linked to inflation from what I have read. Inflation in September was 3.1%

As for not being like a household budget, I get that.

But Governments and businesses are going to have less income coming in due to people cutting back - with all the issues that brings.

And there will be more money going out.

I forgot to mention the National Insurance costs as well - so that's less money people have. As well as more increased costs for an employer as well.

We were doing OK. Both earning above average wage and childcare costs finally coming down. It was finally time to buy a bigger house and buy cars less than 10 years old.

Then petrol rocketed. Weekly shop went up, but we haven't got the time to traipse round various supermarkets. Gas and electric going up.

So what goes?
Haircuts at hairdresser- so money not going into their tills.
The odd stop for lunch on a cafe if we take kids out- no money in their till.
Family holiday.
Occasional nights out- no money in the till.
Babysitter- no chance.

I know we're lucky not to be in the horrendous situation others are in. But how many of us are going to stop unnecessary spending, which then has a knock on effect?

@cakeorwine

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?

I'm sure inflation will have miraculously been reduced by next September.

I'm sure inflation will have miraculously been reduced by next September

They will probably redefine it.