It's interesting how our understanding of the situation is framed by the phrases that are handed down. Why not profits/price spiral, cost of war crisis, Brexit penalty crisis, incompetent government charge, profiteering charge, privatisation penalty etc?
Whilst I agree with more insulation and less ICE and all that, the COLC kind of blames the consumer/employee and some abstract supply issues over which we are meant to have no control and therefore nothing can be done (whilst someone is making a big pile out of this). Hence advice about eating cheap beans are wearing woollies etc.
There were cases in the 70s like the pensioner who died trying to eat cardboard and house fires caused by paraffin heaters, we ain't far off.
I’m 100% behind getting people out of their cars and onto public transport – but vilifying car users is not going to achieve that goal.
Naaaa, make it clear that current levels of car use should be as socially acceptable as farting in a lift.
Not pushing for a pay rise when inflation is at 10% and your food + housing costs are rising is naive at best IMO.
Yeah because all businesses are sat on a huge pile of cash in the bank, especially small ones. But crack on and demand 10%+ wage rises. Then you can have a good old moan when the doors close in 6 months time.
A lot of small business owners will already be worrying about how they'll pay the wages this Friday.
Yep, blame the wage earner for not accepting a paycut rather than the gouging rent-seekers and other rising demands on small businesses' income.
I’m 100% behind getting people out of their cars and onto public transport – but vilifying car users is not going to achieve that goal.
Naaaa, make it clear that current levels of car use should be as socially acceptable as farting in a lift.
Vilifying smokers worked.
It is, at least at my work place, seen as normal to drive half a mile and that's just mental. They should be vilified
A lot of small business owners will already be worrying about how they’ll pay the wages this Friday.
Most will be wondering how they can afford their gas / electricity bills which they have just been quoted for the next year. Many simple won't be able to absorb a 4x increase in energy costs and will simply close.
Vilifying smokers worked.
It is, at least at my work place, seen as normal to drive half a mile and that’s just mental. They should be vilified
They are very different. Smoking is pretty much optional. For many, a car is a necessity and there isn't any applicable public transport (or affordable public transport). Our rail network pretty much only works if you can afford to live in a commuter town with a rail link to the nearest big city - which only works for a very well off subset of the population.
We keep building satellite towns will no public transport whatsoever. People living there have to use a car to get anywhere.
E.g. I live in the centre of Cambridge, 10 min walk from train station. I can get a train to London or walk / cycle anywhere in the City. However, small terraced house in my street will set you back £800k and I'm not in a posh bit, this is the cheaper end of town.
They aren’t currently if you’re in the countryside.
It’s even worse on the Scottish islands - plenty of jobs that were popular with EU students, happy to spend the summer in a caravan. Many businesses running reduced hours because of lack of staff and absentee landlords complaining they can’t get cleaners prepared to give up every weekend to clean up someone else’s mess for £10/hr. Many businesses are seeing reduced sales whilst costs of everything are going up. House building has stalled because materials are too expensive.
I noted Hannah flew to the US recently for an interview
Not even worth responding to TBH but you're wrong. Very wrong. Maybe try to establish some facts before launching ridiculous accusations at people?
Yeah because all businesses are sat on a huge pile of cash in the bank, especially small ones. But crack on and demand 10%+ wage rises. Then you can have a good old moan when the doors close in 6 months time.
FTSE 100 executive pay rose 39% in the last year. Oil and Gas suppliers have tripled their profits. Billionaires have got much richer. Banker bonuses are through the roof. You're looking in the wrong direction. I presume you're one of the tiny few in this small group of people who are much better off? If not then why the hell are you defending them?
FTSE 100 executive pay rose 39% in the last year. Oil and Gas suppliers have tripled their profits. Billionaires have got much richer. Banker bonuses are through the roof.
That is 0.001% of companies.
Most people in the UK are employed by SMEs with <100 employees.
It is, at least at my work place, seen as normal to drive half a mile and that’s just mental. They should be vilified
but that is the complete opposite to what we are talking about. Single occupant, sub 1 mile journeys are indeed ridiculous.
However, loading up your car with your family or friends, and a significant amount of luggage/supplies and taking a long motorway trip to the beach/mountains/festival/inlaws is actually a very appropriate use of a personal ICE car.
FTSE 100 executive pay rose 39% in the last year. Oil and Gas suppliers have tripled their profits. Billionaires have got much richer.
FTSE 100 companies!! 🤣🤣🤣
I'm not defending them in any way.
Get in the real world and look a lot, lot smaller. Shit is hitting the fan from the bottom up, not top down.
Most people in the UK are employed by SMEs with <100 employees.
Even for small business, the question is whether their workers should be absorbing the bulk of the increased costs of keeping their business going, rather than their customers, landlords, or the government (by means of an equivalent price cap on business energy or other intervention).
Asking your workers to give you their money by becoming poorer in real terms seems to be the most accessible default option, and it's not too surprising that workers aren't always just going to roll over and take it.
Even for small business, the question is whether their workers should be absorbing the bulk of the increased costs of keeping their business going, rather than their customers, landlords, or the government (by means of an equivalent price cap on business energy or other intervention)
Unless the government steps in rapidly to absorb energy costs for SMEs, most will just stop trading. They don't have the ability to absorb a 4x increase in energy. Pubs would have to put an extra £1/£2 on a pint and expect to sell the same amount in a recession. Any business which is running close to edge won't be viable.
SMEs with a healthy profit, which they would use to invest in new technology / training etc will be reduced to break even at best....
Get in the real world and look a lot, lot smaller. Shit is hitting the fan from the bottom up, not top down.
Yes it is, but it is energy prices which are crippling small businesses not employees demanding more pay. Even if all employees across the economy agreed to a pay cut it would not stop the tsunami that is coming. You're worrying about increases in inflation when the real danger is deflation and depression, or even worse total collapse of the economy. Try to think about what that means for a second, because it scares the shit out of me.
The way gov + central banks deal with inflation is to increase interest
Liz Truss wants to cut taxation immediately to give us more spending power, the issue is that she doesn't say where the money is coming from to keep the UK in a position to spend should the various world-crises continue.
The UK is currently around 100% GDP in terms of borrowing and interest rates are now beginning to rise on debt risking higher inflation and a harder crash, particularly if tax cuts are a reality based on further borrowing
If anything we need to be thinking about raising taxes in the future from those individuals and businesses that can afford it, which comes around to the possibility of windfall taxes and higher top rates
UK taxes have been around 32% of GDP for 50+ years, regardless of who's in power. We want good public services but won't pay for them and successive Governments won't push the issue.
Making public services poorer won't stimulate the private sector
Liz Truss wants to cut taxation immediately to give us more spending power,
Only really benefits the rich, the poor don't pay enough tax for the tax cut to cover more than a few % of the increase in their energy bill.
Also, does nothing for SMEs who will just have to either fold or lay off staff...
Most people in the UK are employed by SMEs with <100 employees.
The vast majority of businesses in the UK employee between 0-9 people.
Only really benefits the rich, the poor don’t pay enough tax for the tax cut to cover more than a few % of the increase in their energy bill.
Also, does nothing for SMEs who will just have to either fold or lay off staff…
That's my point
We want good public services but won’t pay for them and successive Governments won’t push the issue
Making public services poorer won’t stimulate the private sector
[url= https://live.staticflickr.com/65535/52305748379_15b16eef5a_c.jp g" target="_blank">https://live.staticflickr.com/65535/52305748379_15b16eef5a_c.jp g"/> [/img][/url][url= https://flic.kr/p/2nG5CFV ]Tax cuts[/url] by [url= https://www.flickr.com/photos/brf/ ]Ben Freeman[/url], on Flickr
total collapse of the economy. Try to think about what that means for a second
I dont know what it means.
The pound becoming useless for the purpose of purchasing goods and services?
Essential service jobs (eg infrastructure, health, sanitation, public transport) with mass understaffing to the point the services collapse?
Unless the government steps in rapidly to absorb energy costs for SMEs, most will just stop trading. They don’t have the ability to absorb a 4x increase in energy.
Agreed - the alleged Thatcherite idea that Conservatives are the supporters of SME is being put to the sword by every week's delay. **** business, etc. (except big business who pay us, obvs)
Only really benefits the rich, the poor don’t pay enough tax
Or any tax, in fact. There is no benefit to the most vulnerable people, except through the non-existent medium of 'trickle-down economics' (the theory that if you throw money at already massively-rich corporations and individuals, they will spend more and this will eventually benefit the serfs.)
Depressing (relatively) low-paid workers'wages is the last thing you want to do as they spend most/all/more than the money they have leading to a reverse multiplier followed by a negative accelerator as businesses fold.
In my local bar, which serves outstanding beer, numbers of punters have dropped considerably (cancelled quiz night etc). If they sell less beer the quality declines as the pressure for price rises increases. Where I moved from the locals used to knock off work and hit the pubs from 4.30 till 7. Mate reports that a tea time now they're often all empty (so even less reason to go). I imagine this is being replicated elsewhere and this is before the big matters hits the fan.
The UK is currently around 100% GDP in terms of borrowing and interest rates are now beginning to rise on debt risking higher inflation and a harder crash
Calling rone to the thread please... 😀
Seriously, you have this all wrong. You are right that we need to tax the rich (a lot) more, but not so we can reduce borrowing. We need to borrow more, and stop raising interest rates which only helps bankers and creditors. But we need to ensure that the money 'borrowed' is invested in infrastructure and services, and is targeted at people and businesses to prevent them going under rather than finding it's way into the pockets of the rich. The oncoming recession which is being engineered by the BoE is being done for one single reason, to protect the value of assets owned by the richest 10%.
I dont know what it means.
No food on supermarket shelves. Breakdown of normal govt services such as schools, hospitals etc. Mass unemployment, not receiving your salary at the end of the month. Fuel supplies drying up, savings and pensions wiped out, and ultimately mass civil unrest. See Sri Lanka, Argentina, Zimbabwe, Greece, post-soviet Russia etc. It's not pretty, and any government which allows it to happen needs putting up against a wall (and they often are).
The whole economy is a house of cards and the main thing holding it up is energy, and the price of that has just increased by a factor of 10. When those increases filter through to the wider economy, as they are now starting to, the bubble will explode. Unless the govt takes radical action that is, but what hope is there of that?
train vs car for a bank holiday getaway is pretty moot - our car with 4 up (as we are for a bank holiday getaway) emits marginally less co2/passenger km than a train - the car realisitcally runs around 140g/km (110g/km on paper), so 35g/person, a train is apparently ~35-40g/passenger km depending on where it is.
the car also travels fewer km to get to its destination (as we don't faff into london to get to the west country) so overall emissions is reduced
Can I ask how old you are dazh? Obviously don't have to be specific - nearest decade will do! 🙂
It shouldn't be relevant but age does give you some perspective about this. Yes, some people will lose everything, some people will gain a lot.
As a 12yr old in the early 80s we went from having a very nice life living in a 5 bedroom stone country house in an acre of land to all living in a 4 berth caravan for nearly a year when my dad's company collapsed during the recession at the time and 26 people lost their jobs. Took him three years to rebuild a new company.
The world is like this, it doesn't bimble along at 1% interest rates for eternity.
I'm not defending anyone or any government policies, things could be done far, far better than they are now. But energy is only part of the problem.
If Andrew Bailey really is serious about wage restraint then he needs to come out with some pretty good reasons why poor people should accept a few really bad years and significant drops in living standards, and what he's going to do to stop an uncomfortably large % of the UK going 3rd world.
Actually that's the government of the days job.
The world is like this, it doesn’t bimble along at 1% interest rates for eternity.
The world/UK has rarely had a shock to the economy as we are now experiencing. WWII required nothing less than the total reform of the global financial system to support rebuilding. The 70s oil shock resulted in a 3-day week. The collapse of the banks required mass bailouts and nationalisations. The pandemic required govt propping up the whole economy by paying people's wages and dishing out free money to businesses. This crisis is on a par or worse than most of those, and yet we're hearing nothing from any politician or seeing any urgency like we did in 2008 and 2020.
*48 BTW, not that I see the relevance in that.
Seriously, you have this all wrong
"UK government debt is now over £2.2 trillion, or about 99.7% of GDP - a rate not seen since the early 1960s. In June (2021) alone, debt interest cost £8.7bn" (25/7/21) https://www.bbc.co.uk/news/uk-57958178
Two things:
1) Those figures are a year old, but I don't expect that they've improved significantly
2) There are different ways of thinking in economics (IAMNAEconomist, but I know that much 🙂 )
3) Told you, IANAE 🙂 The BoE has bought around £900bn in bonds in quantative easing, someone has to pay for that, presumably us in interest rates??
the car realisitcally runs around 140g/km (110g/km on paper), so 35g/person, a train is apparently ~35-40g/passenger km depending on where it is.
The first google result says 14g/person Co2 on the train and 156g/person by car. The train runs anyhow and the more people in it the lower the CO2 per person.
What is irritating is that the train costs more, in fact on the last long jouney I did (Pau Berlin) I checked and the train was more expensive for two of us than the car, bus or plane but by far the lowest CO2. I took the train. That's cash in SNCF/DB coffers and demand for their services rather than making energy companies richer and driving energy prices.
Every choice we make is a small nudge towards the type of future we want.
We need to borrow more, and stop raising interest rates which only helps bankers and creditors.
I assume by 'we' you mean the government/state/taxpayer?
The government can't decide what interest rates it borrows at.
If it tried to borrow at, say,0 5% no one would lend to it,it has to pay the market rate. This is much more influenced by what lenders can get elsewhere and how risky they think it is than some nominal number dreamt up by the BOE.
As government debt goes up new debt gets more and more expensive
I'm partially trolling here but
on the last long jouney I did (Pau Berlin)
What a terribly long way. How wasteful of you. Pau to Berlin is about 1800km; my holiday this year was 270km away 😉
EVERY CHOICE WE MAKE...
I'm just pointing out that most of us do the things we want and can afford to do. Yes, we can mitigate them, and that's what you're doing, but don't criticise people for wanting to go places.
Those traffic jams you excoriated earlier - how many of those people are taking a local UK holiday instead of flying to Bermuda or wherever?
The BoE has bought around £900bn in bonds in quantative easing, someone has to pay for that, presumably us in interest rates??
The BoE pays for it, they create the funds to buy the bonds, at the instruction of the govt (I believe the chancellor writes them a letter asking them to do it and they are legally compelled to comply). You're right that this has other indirect but not necessarily determinant effects on the economy, but it can't be described as 'people paying for it' through inflation or resultant higher interest rates. It's irrelevant in any case when the alternative is the loss of millions of jobs and the devaluation of savings which would cost people a huge amount more.
The government can’t decide what interest rates it borrows at.
Of course it can, that's exactly what QE does, it manipulates the markets to drive down bond yields*. Central bank independence is an illusion.
*which is one of the main drivers of the stock market bubble as investors have moved money from bonds to equities.
For many, a car is a necessity and there isn’t any applicable public transport (or affordable public transport)
I'm always amazed how some people just "have" a car.
Did you all go on Bullseye in the 90's and win it with a speedboat?
How have I missed out on these costless cars?
Central bank independence is an illusion.
The sooner politicains (of either stripe, I don't really care) come clean on this, the sooner we can have senisble democratic accountability and mould the central bank into a form that rather than has price stability and interest rates control as it's major function, we can choose to use it's power to reverse chronic underinvestment, ballooning private debt, rising inequality, and climate breakdown.
I'd ideally want Starmer to start banging this drum, but we need to have this discussion sooner rather than later.
democratic accountability and mould the central bank into a form that rather than has price stability and interest rates control as it’s major function, we can choose to use it’s power to reverse chronic underinvestment, ballooning private debt, rising inequality, and climate breakdown.
This was one of McDonnell's core economic policies (so Starmer will stay well clear). Without wanting to be conspiratorial, I often think the price Labour paid to the market for winning the 97 election was central bank 'independence'. It enshrined the protection of asset prices into the financial system and de-risked speculation making a lot of people very rich. The power of a central bank needs to be used for the benefit of all not just a tiny few at the top.
Even if politicians recognized and just spoke about the fact that interests rates are not politically neutral. and that while being a useful tool against price instability - it's not the be all and end all of Central Bank use, and that they effect the poor to a disproportionate amount and at least try to mitigate it.
Those traffic jams you excoriated earlier – how many of those people are taking a local UK holiday instead of flying to Bermuda or wherever?
indeed. Or just doing 'stuff'! I'll be one of those people on the M4 this bank holiday weekend. Visiting a friend's birthday party. It's 40 miles each way, and the cost of public transport (for two) is about 400% of the cost of the petrol.
I don't think Edukator's comment that people choosing not to take the (very) expensive option shows that they have loads of money to squander really stands up to scrutiny, although I agree that this world would be a far better place if everyone drove less, and that our governments are doing sweet FA to actually bring that about.
and that our governments are doing sweet FA to actually bring that about.
Not enough people are going to vote for a govt who're honest about restricting car use. That's the start middle and finish of that conversation. Committing to reducing emissions is about the best you're going to get.
so its pretty well established that the main grunt of the cost of living crisis is based on the wholesale energy prices, and they’re forecast to go up, and then up some more for a couple of years.
is it? wholesale energy prices are not as out of control as that; products which aren't classically energy intensive to produce are going up too.
Thing is, creating gas/electricity hasn’t actually got more difficult or expensive. We can’t buy it from russia, sure, but a bunch of countries who can’t be as principled can, so the gas they produce will, mostly, still be used. In europe we’re going to rush around building up infrastructure/do deals to get our fuel in from elsewhere, and at some point, in a few years time, that’ll be done.
Part of the stupidity is that renewables energy cost (market price) is tied to gas price.
trying to sidestep the “everyone will just keep it as profit” school of thought, won’t that redress the supply side of supply & demand, and so the 300% increase in energy prices we’ve seen will fall back through the floor, causing potentially more economic pain on the way back down?
it will only fall in a market where there is true competition (or government-enforced price regulation) otherwise the suppliers will sit on the profit. So even if energy costs fall - that won't lead to prices of all products falling - indeed if it puts more cash in consumers pockets, and consumers spend that money on discretionary items it could actually fuel inflation couldn't it?
Rampant consumerism and energy waste is probably better controlled through painful prices than positive messaging, so long as those who have no choice are either protected or enabled to get choices.
How much of UK inflation is linked to energy cost here? It looks to me like there are other factors - weak pound v dollar; brexit related labour shortage; covid making people change life/work/business priorities etc.
I suspect that rather than mass deflation - employers will need to take a serious look at how they pay lower skilled employees so they can afford the basics of life. Key employers will start and everyone else will have to follow because why would I do some high stress job for mediocre pay. Public sector is typically really slow to respond to these sort of trends and so they will make a mess of this. Ultimately they will have to, and increase taxes to pay for it which will put costs up!
Another fun STW thread. Some folk really do wish we just immediately stopped our lives and lived in caves to save the planet.
These are the threads I come here for, great entertainment 😀
indeed. Or just doing ‘stuff’! I’ll be one of those people on the M4 this bank holiday weekend. Visiting a friend’s birthday party. It’s 40 miles each way, and the cost of public transport (for two) is about 400% of the cost of the petrol.
Only if your car is otherwise free,
Sauce:
Return tickets Reading to Swindon for two - £39.20 (assumes you have a railcard, which seems fair if we're allowing the assumption you're allowed several thousand pounds worth of car).
Vs fuel @ £8/gallon. So to break even needs to do 20mpg (quite likely to manage that), but 80mpg, that's either impossible or in a car that's certainly new enough you should be counting the depreciation each day.
Also, what kind of friend is it if you can't have a beer with them on their Birthday?
Of course it can, that’s exactly what QE does, it manipulates the markets to drive down bond yields*.
And QE is inflationary, which drives interest rates up...
I did say the cost of the petrol! And I'm staying over 😉
I suppose the assumption of the railcard is reasonable (though I don't actually have one)
The car does about 40mpg. But you haven't included the cost of getting to and from the train stations on local transport, ie about £2.50 per person at each end of each leg, so about £20 in bus tickets to add to the train fares. (and let's save the calculation of how much time to allow to get to the station in time for another day, but it's quite a lot!)
