Should we have a national ‘no spend August’ to help lower inflation?

[ALady78]

Like many people I’m really concerned about high interest rates. We’re actually still in a fixed rate mortgage deal until early 2025 so I was hoping things would calm down by then. But now they’re saying interest rates will have to go higher than previously thought and I’m already panicking about what we’re going to do.

So if the idea behind higher interest rates is to curb spending then why haven’t they clearly said this? I’ve got this from the Bank of England website today:

‘Higher interest rates will make sure inflation comes down by affecting spending habits in the UK.

This happens most directly if you have a mortgage or you are paying back a loan.

Either way, you may have to spend more on these things. And that means you will have less to spend on other things that are captured in theConsumer Price Index (CPI) measure of inflation. This is the measure of inflation that the Government asks us to target.

Food, housing, transport, and household bills are everyday essentials. You can’t choose not to spend on those. But you may put off buying other things.

Also, higher interest rates may mean you are less likely to want to take out a new loan to buy things unless you need to.’

If this is the case shouldn’t we all stop spending immediately on things which aren’t essential? No new household items, takeaway’s, days out, clothes etc. I’ve carried on as normal at the moment because we can, but I would stop if it would help. I mean, I know they always say ‘interest rates have been increased to curb spending’ but then why doesn’t Rishi hold a press conference and CLEARLY request us to stop buying ‘stuff’ if that’s what they need us to do?

Is the solution for us all just to stay in and buy only basic food for the rest of the summer?
But then won’t people who make or provide ‘non essentials’ lose their jobs if we stop so how does that help?

I've already had no spend January as I have nothing spare to spend. Same for February, March, April and May. No reason to think July and August will be any different, nor September onwards to be honest.

Not to mention the children in Asia earning pennies per hour.

August would be the worst month to do this. I need to get my kids September uniform sports kit and shoes etc. After December it's our most spendy month.

And therein lies the conundrum of the whole thing being bollocks and no longer fit for purpose.

I've been on a no spend year, never mind one month.

A lot of people are making sarcastic comments but no one has really answered what the government/BOE want us to do. Interest rates have been increased to influence our behaviour, so I’m trying to figure out (if possible) what the aim is. I’ll repeat the wording again:

‘Higher interest rates will make sure inflation comes down by affecting spending habits in the UK.’

I’m genuinely trying to understand what change in spending habits they are looking for from us, the public.

Obviously not spending at all on non essentials is very drastic and would have consequences for people’s businesses and jobs. So would it help if we decreased our spending by say 50% or maybe 25% or just 10%?

Also on the flip side it encourages people with money to save it...so not to spend it.

I don't know about that. I get the idea, but there are things I might have thought twice about buying, smallish things, but I say to myself 'that's only 1 month's interest on my savings'. Of course the principal is losing buying power also.

I know that the point about august doesn't make sense but this article is saying that the interest rates hike is to stop people spending. I was interested because I hadn't really read that so explicitly before as far as I can remember but it's mentioned twice here

https://www.bbc.co.uk/news/business-65891838

So whilst I get what people are saying about the impact on businesses and staff the point does seem to be to stop people spending.

I swear people just love to be downtrodden in this country.
Why is the 1st reaction so often that, working classes should solve inflation or some other government issue by going without/being frugal?

Let the rich get their finger out

The governor of the B o E said we should all just get used to being poor.

He's a massive arsehole. If you have any cake, and he's around, don't let him have any.

We're in a spending frenzy at the moment in our house, so it seems.
My plan is to get all jobs done (we've just had a load of double glazing fitted), the garden fully planted, and buy any furniture that we want. We're also getting repairs done to our vehicles (one is booked in for major work tomorrow) and I want to have a couple of really nice holidays....before our mortgage potentially doubles in 2025.
I'm possibly doing the exact opposite, currently, to what the Bank of England wants!

We've got a great summer holiday planned, kids! You sit there and count your fingers! When you've done that, you can even count your toes.

Christ alive 🙄

They want to stop people spending so much using loans and credit cards. That is why the interest rate has gone up. The higher the interest rate, the less likely people are to borrow money.

We should try & spend as little as possible to stop the government raking in all the VAT, stop using things like Amazon to stop them making massive profits & stop spending money on things like petrol, alcohol & cigarettes to stop them collecting duty. A general strike would be brilliant because there would be no taxes & NI for them to waste on vanity projects. I just wish we could do something to force out this bloody government, we need change, but I'm afraid that I don't think Labour is the answer. This is coming from a Labour Party member who has supported the party all my adult life.

They want this change in spending habits:

They want people to stop maxing out their credit cards and living beyond their means by spending money they don't have on things they don't need.

🤣🤣🤣

Lenders don't use their own money to give out loans, they use their customers' savings. If people are spending money instead of keeping it it in their bank accounts, the banks have less money available to lend to other people. There comes a point where it has to stop.

Raising interest rates means that people are more likely to save money because they earn more interest on it, and less likely to borrow it because it costs them more.

I was talking at your individual level. Some people are not the type to ever save, my partner for one. I'm talking generally that higher interest rates will encourage a significant number of people to save and thus have a dampening effect on inflation.

This is all economic theory of course, but not what is happening in reality. It is startling that we still have economic growth meaning the money is still flowing, when everybody in my experience seems to be struggling with cost of living. I'd love to see an article that unpicks this.

If Ive read your OP correctly, you want Rishi to hold a press conference to say "@ALady78 's fixed rate mortgage runs out in 2025, so you must all stop shopping in August".

ALady78

Because you live beyond your means you now want everyone else to cut back in order for you to be able to save a bit of money ?

ALady78
Because you live beyond your means you now want everyone else to cut back in order for you to be able to save a bit of money ?

Eh where have you got this from? I was giving myself as an example but I’m not the only one affected. At least I’m asking the question about whether the public can do anything to help stabilise things. After all we’re the ones buying, spending, saving etc. The policies are made to influence OUR behaviour.

LinMortisanass
If Ive read your OP correctly, you want Rishi to hold a press conference to say "@ALady78 's fixed rate mortgage runs out in 2025, so you must all stop shopping in August".

🙄
So is everyone else OK then and I’m the only one concerned about this? Right OK.

Well I give up. If we struggle a lot we can move in with PIL or my parents - who both have large detached houses with mortgages paid off. We won’t be homeless.

Have woken up this morning with extra existential dread as I contemplate likely personal bankruptcy and homelessness as a struggling small business owner. But hey ho, it's probably because I'm not vibrating at a high enough level and nothing to do with the absolute clusterfuck that is current geo-politics and an economy skewed to funnel more and more money to fewer and fewer people.

I admit I'm too thick to get my head around it all but the whole system is nuts.

Money is supposed to be a tool to make exchange of goods and services easier, right? Because not everyone can carry a bag of goats around and not everyone would find a goat helpful.

How the hell has this become the nightmare that it is?

Money is something we constructed, and that could be controlled in a fairer system if people in power weren't so greedy. There just isn't the will to do it.

This thing about not printing money because it drives prices up etc is because that's how the system is designed - so it could be changed surely?

All the time we hear about how the "market" dictates it all. The stock market is essentially gambling.

Rigging of the markets is entirely plausible.

With the little understanding I have, factor in the inevitable changes that technological advances are going to make to everything and faster than we realise, it's going to be increasingly difficult to keep up if you don't already have money.

Money buys choice and certain freedoms. And widgets. Right now the choices are simply food, shelter and energy for those with the least money. No fun for you. You may be able to afford the bread but you'll only get the circus if you download this app.

It's all doing my head in. The lunatics appear to be running the asylum.

I get that progress is inevitable but I'm not sure as a species we're geared up for the speed of it now. People always say oh this has happened before, things will get better, it will sort itself out, but at what cost? It looks to me as though the economy is structured to benefit the few over the many, but why? Is it ideological?

I just want to be able to pay my bills and perhaps go to the pub once or twice a week. Maybe buy a new frock from the charity shop occasionally because sustainability etc. And for my community to avoid implosion. Why is that too much to ask?

In order to keep myself I sell widgets. I have to pay for the privilege to do so before I even get to pay myself. You can bleat on about hard work etc but it isn't currently paying. I can't meet my obligations. I can't afford to downsize. I'm fucked, unless I take 200.00 a day consistently in my shop. That's all I need. It hasn't happened for months. Debt is catching up with me.

So you'll tell me to wind up my business. Okay, off I trot into the labour market, 54, widowed 18 months ago. Qualified for care work, possibly as I've spent most of my life raising children and caring for elderly relatives. Yes, my choice - but also not really. Because I love my family. And I'll have to claim Universal Credit. So I'll be another part of the problem that is a fucked system.

Sorry for the disjointed rant.

Better get my big girl pants on, seize the day and manifest something positive.....

Good luck and solidarity to anyone else struggling to understand this madness.

People will stop spending as they won’t be able to borrow to buy the big ticket stuff, will no longer buy cars on PCP etc etc

they will continue to buy smaller stuff such as clothes etc but in a more infrequent basis

Current Inflation is caused factors outside of the UK, this is why raising rates to they to bring it down is just fucking stupid.

You not being able to afford to pay your mortgage isn't going to convince the middle East to lower the cost of it's oil. Or tomato farmers in Spain to lower their costs, or olive oil producers in Italy to lower their prices.

UK inflation is caused by extra service costs which MUST be passed on the the consumers, therefore prices are increasing. People are asking for wage increases to put food on the table but these increases are half of the rate of inflation so blaming greedy workers is passing the buck.

The real reason we increased rates is because it makes MASSIVE profits for the banks. The controllers of which are all Tory Party doners or members of the "Old Boys Club".

It's a fucking sick game, played by the elite, who never have to worry about money.

Inflation will only come down when other countries lower their costs.

I'm going to add to this madness

If you made this rant into a tiktok it would go viral and you could make some money out of your misery.

The world is 🤪