Inflation to hit 15%

[onthefencesitter]

www.independent.co.uk/news/business/inflation-bank-england-cost-living-b2137311.html

www.theguardian.com/business/2022/aug/03/uk-inflation-could-reach-15-by-start-of-2023-experts-say

What do you all think?

What’s so mystical about raising wages at the bottom? You remove state subsidy aka ta max credits/UC topups and let the market adjust. Wages are low and productivity poor because of state subsidy for employers so they don’t pay market rate.

We will be going back to the days of old people dying from hyperthermia, I worked in the tax office & in the 1980's dealt with one of the biggest pension schemes in the country, we used to get boxes & boxes of P45's for people who had died during the winter.

👍 100%. So many people don't recognize benefits for what they are - a corporate and landlord subsidy.

I don't know how any party could phase it in, but removing WTC and UC so that corporations like supermarkets couldn't shift/share the costs of employing people with the tax-payer would be a start. You want people to work: pay them, properly, with sick pay and pension benefits. Forget the idea of 16 hours or less. Very tough for young mums with small children needing to pay their utilities bill via a few hours a week on a checkout, and still resorting to a foodbank, but it is going to have to happen eventually, and the longer it's postponed the more painful it will be.

We/UK actually have among the highest NMW rates in Europe, but we also have astronomic property costs because of the population density. Spain's NMW is about 7.00 euros (£6,50), but the dry hot central core of Spain is losing population fast because there's no water and the economy is vanishing. Same in Italy. The whole world wants to move into the temperate zone with global warming and climate change, and there isn't room.

Lots of these Brexit voters were retired and frankly wouldn’t be affected by it. Why would middle class ,white retired pensioners from Sussex, Hampshire really be affected?

@Sporty2022, there were lots of leave voters who are young and working class. This is the profile of leave voters.

www.jrf.org.uk/report/brexit-vote-explained-poverty-low-skills-and-lack-opportunities

I don’t think tax cuts is the answer? Many large businesses make big profits and can afford to pay tax. How exactly does lowering taxes benefit the economy? Less money going into essential services?
Plus it wouldn’t really affect people on lower incomes anyway.

Personally, I’d rather pay a couple of quid a year more on income tax if I know it was being spent on public services.

Id rather be taxed an extra £200 a year if it means life can be better in the UK for everyoneAnd I only earn £30 k a year so I’m hardly a high earner.

Reagonomics, isn't that the idea.
Idea is Cut tax and companies will "invest" the tax savings into ways of making profits: which is true. But sometimes those investments are share buybacks, or investment overseas. or some other thing that basically doesn't grow the economy at all, much less lead to higher wages.

Of course if tax cuts did lead to higher wages then that means, oh yeah, more inflationary pressure upwards.

None of that is unique to the UK. The US, Australia, Canada, and Europe are all facing the same issues. It's a "Western" World problem!

I think it's more to get international firms to move into the UK, and to keep UK firms here, as opposed to relocating to other countries with lower taxes.

It's the main reason why Ireland had such a big economy - lots of international firms relocated to Ireland for their low corporate taxes.

When UK is wanting big firms to move their head offices or factories here, we need a carrot to dangle, and low corporate taxes is a very popular carrot!

When firms move into the UK, it creates jobs, brings in tax revenue (not just corporate profits, but also from VAT, PAYE, NIC, etc), and there's the knock on effect of them buying goods/services from local suppliers, so there's the multiplier effect of those firms also paying more in taxes etc on their greater profits and higher employment.

"let the market adjust" more right wing nonsense.

If you took away working benefits, wages wouldn't rise to compensate, thats why we had to have MW and before that income support.

You think a farmer will compensate his worker on MW? what with magic beans? the farmer also has no money, tied in to SM contracts, input costs gone up 300% or the Care Agency will rise wages for carers? again.. how? Councils have no money to give them extra... thanks to you lot.

All wages have to rise, you have to have differentials and the Govt has made it perfectly clearly with the recent NHS rise, they have no intention of rises wages at the bottom/lower earners.

Ed Davey has a better idea, Keep the Cap as it is, retrospective Tax on Energy Industry.
Personally, i'd part nationalise the sector with that WF tax.

When firms move into the UK, it creates jobs, brings in tax revenue (not just corporate profits, but also from VAT, PAYE, NIC, etc), and there's the knock on effect of them buying goods/services from local suppliers, so there's the multiplier effect of those firms also paying more in taxes etc on their greater profits and higher employment

ROI has full and free access to one of the worlds largest FTZ, the UK does not, Cross channel lorry delays at shocking, with almost no facilities.

also, judging by some posters who live there, their public services are a mess, & unemployment rate is higher than the UK.

UK has a very low CT rate, 19%, not much higher than ROI and considerably lower than, say Germany's, not yet seen VW relocate to the UK....

So many other factors matter too, like a functioning healthservice for your employees, good education system, transport, well educated workforce.... not things we are excelling at.

The problem with the world today is we see ideas and theories as 'right and left wing'.

It is almost inexplicable to me. I am socially ultra liberal - but on monetary and fiscal policy - I'd be classed as ultra conservative.

No-one is saying that farming and other critical industries should have their workers supported and left to the free market. They are arguably too important to leave to the vagaries and corruption.

However multinational profit driven corporations that are paying workers wages that need to be topped upped with state aid, whilst handing profits back to shareholders - outrageous.

Landlords who speculate with debt in the housing market, end up getting buggered with interest rates because they can't risk model and subsequently end up being the end recipient of state aid in the form of UC and housing benefit? Ridiculous.

No-one is saying that farming and other critical industries should have their workers supported and left to the free market. They are arguably too important to leave to the vagaries and corruption

Thats exactly what @sst1234 was calling for.

...and you will find that almost all jobs are critical, often never thought of that until they stop doing them.... as we found out in the Pandemic.

Right, Centre and Left is used because our political system is based on that, no one can take into account an individuals politics.

However multinational profit driven corporations that are paying workers wages that need to be topped upped with state aid, whilst handing profits back to shareholders - outrageous

Agree but how to address it? without harming the workers in your local Tesco - i'd have graded CT rates, based on profit and the pay of their lowest paid workers.

Landlords who speculate with debt in the housing market, end up getting buggered with interest rates because they can't risk model and subsequently end up being the end recipient of state aid in the form of UC and housing benefit? Ridiculous

Privatising social housing is crazy, Tax payers money via HB and UC used to buy the Landlord a house.
Ans - Build far more Council housing.

Well one way to raise wages for a Tesco worker without subsidizing businesses is by increasing the minimum wage to a reasonable amount. I would say that no one on a min wage job should be getting benefit because wages should be high enough. You could increase min wage and give subsidies to businesses for training workers and hope you end up with a higher wage better trained workforce. But the reality is the Tories really do only care about their financial backers and thats large corporations

“All wages have to rise”.

Thats called an adjustment or correction.

If you take away benefits, and keep raising minimum wage in place, some employers who cannot afford to be business would go out of business. Their business model does not work anyway if they cannot afford to pay market rate wages. The rest either put up prices or automate. The latter is what has been missing due to low pay subsidies. And this is thread on UK productivity is lagging other advanced economies. It’s not a secret. Look it up.

As for energy prices, does Ed Davey or do you have any ideas of how taxing and capping energy prices improves supply or energy security. If the wholesale price is high and you place price cap, forcing energy companies to make up the difference, they go out of business. Maybe you missed this in the last few months. Equally windfall tax can only be applied to profits. By capping price, you force them to make up the difference between the wholsesale price, hence no profits to tax.

I think your theory is based on fantasy, not math.

Again, it’s this is not about party politics. That line is too rehearsed and too misleading.

Nu Labour introduced tax credits. They set up the economy to get into the low productivity and inflationary mess that it is in today. Unfortunately the Tories did nothing to reverse this.

This is not a left vs right thing. It’s down to the fact our political classes are mediocre, career civil servant types who are completely detached from the real economy.

I think you are missing how wages, productivity and automation work in tandem with each other. Raising wages does not mean food production stops. If that was the case the rest of G7 nations would starve.

@sst1234 actually i think your maths is too simplistic and doesn't understand modern economics particularly within a global context plus the British context. The global context is that extractive capitalism of global corporations i.e. American ones (and Chinese but for national security reasons that's not happening) have no interest in what happens within the UK and essentially focus on money extraction in certain places while relocating it elsewhere. The UK is not a closed system.

Productivity and increasing productivity happens by upskilling workers and automation - thats good in theory but can be disastrous for local workers unless the government intervenes. To increase productivity and not harm local workers - government either has to create local conditions for businesses being incentivized to upskill like in Germany - i.e. change of business culture, end of zero hour contracts, a culture of apprenticeships where the person is then kept by a business for ten years or so (otherwise it's not cost effective to train them) etc etc. Or a mass and genuine retraining program funded by the state - free and focused on current skills shortages.

Neither is what the Tories are interested in doing or their backers large corporations. Sadly what they are interested is to carry on in the massive transfer of public funds into private hands - look at how they've dealt with Covid if you want to see at this in practice

@sst1234
Thats called an adjustment or correction
If you take away benefits, and keep raising minimum wage in place, some employers who cannot afford to be business would go out of business. Their business model does not work anyway if they cannot afford to pay market rate wages. The rest either put up prices or automate. The latter is what has been missing due to low pay subsidies. And this is thread on UK productivity is lagging other advanced economies. It’s not a secret. Look it up
As for energy prices, does Ed Davey or do you have any ideas of how taxing and capping energy prices improves supply or energy security. If the wholesale price is high and you place price cap, forcing energy companies to make up the difference, they go out of business. Maybe you missed this in the last few months. Equally windfall tax can only be applied to profits. By capping price, you force them to make up the difference between the wholsesale price, hence no profits to tax
I think your theory is based on fantasy, not math

So what about the industries that we rely on that cannot make a profit without subsidising wages? or rising prices so much that people no longer buy them?

Your idea of rising the MW, will just decrease differentials, eventually we'd have most of the workforce all on 14 ph.

Automation does not work in every sector nor is it the sole answer to productivity, some UK factories, despite hi automation had lower productivity than European ones.

One energy, we will face very high prices for many more years to come, so we either cap/nationalise OR give people 100s of billions, perhaps trillions in subsidy, which feed the higher price spiral.

A cap has to be followed by making up the difference to the energy companies or they'd leave the UK market, which is why i'd prefer nationalisation i.e as we did with the banks.

E.G 3 years ago Shell might have forecast 10billion for their yearly profit, they will now make 40 billion, cost of production hasn't risen 4 fold and neither will they boost investment based on (relatively) short term price fluctuations.

So WF tax is a the only way forward.

Actually, a true Tory solution would be to have no energy help, demand would plummet, prices would drop.... Would you support that?

None of what you have written is an argument against paying wages at market rate rather than subsidizing them to keep pay artificially low.

Same for energy market. You seem to be having an argument all of your own. None of what you have written makes any sense when the pressure is on supply side.

I think they pluck the figure out of thin air. Take for example the price of milk or fuel... both have gone up by a third easily this year. That's 33%. Breadboard about 20%. My weekly food shop has gone up by at least 30% in cost. We used yo have money to spare each month now as two adults with 2 children and a fairly low morgage(until the fixed term ends in Feb) we barely have anything to spare at the end of the month. Yet we fall in the no help offered category because of our earnings. Had to start making serious cutbacks and changing the things we do buy to make allowances for when fuel prices go up even further.

But we’re a working family and can’t afford £300 or £400 a month for energy , if it’s get that high?
What can I do ? Don’t qualify for any extra help.
I can’t afford 4K per year!

History shows us the market is happy to pay humans less than they need to live on.