Archive for octobre, 2013

Why is inflation so much higher in Britain?

jeudi, octobre 24th, 2013

Writing in his Economic Outlook column in The Sunday Times of 20th October 2013, David Smith posed the question: Why is inflation so much higher in Britain?

New Eurostat figures show that the UK inflation rate last month of 2.7% was the highest of all 28 EU member states and more than double the EU (1.3%) and Eurozone (1.1%) average. More than half of EU member states have annual inflation rates of 1% or less. This has been picked up by the opposition Labour party adding weight to their argument that there is a cost of living crisis in the UK which the government is failing to control.

Ruling out the effects of previous Sterling weakness pushing up import prices for globally-traded commodities such as food and energy, or pay increases (up by only 0.7% on a year earlier), the major problem for the UK appears to be domestically generated inflation and particularly in the service sector (3.4% last month). Over the past 6 years for example, food and drink prices in Britain have risen by 35.6% compared with only 1% in the Irish Republic! It would appear that companies can push through price rises in Britain more easily than in other countries or , put another way, perhaps up until now such price increases have been more culturally accepted (or expected) than in other EU countries, but not now with consumer incomes squeezed during a period of austerity.

Inflation is significantly too high for the current rate of earnings growth and, with so-called Green Taxes already 9% and rising to 14% of consumer energy bills, it is not so surprising that the Prime Minister has been forced by the Opposition in the Commons yesterday to announce a re-think on energy policy, pricing and the overall competitiveness of the UK energy market

Reference: Like it or not, Britain is hitched to high inflation, David Smith ( , Economic Outlook, The Sunday Times, 20th October, 2013

An Economic Policy for the Many?

vendredi, octobre 11th, 2013

Despite the negative « Flat-lining Economy? mantra of the Shadow Chancellor Ed Balls and the opposition Labour party over the past three years, the British economy finally seems to be increasingly on the mend with the return to growth. This has also now been accepted by Labour which has been forced to reposition its attack on the government?s record, by focusing on the increased cost of living for the many not yet sharing the benefits of growth and suffering on incomes which, in real terms, have not kept pace with inflation.

As a result, a populist commitment by Ed Miliband the opposition leader to freeze consumer energy prices should he be elected Prime Minister in 2015, has received a favourable response from voters to which the government has responded to a degree by a proposed cap on rail fare increases.

Opinion polls suggest that while the public still trusts the Conservative party on its competence with the economy by a wide margin over Labour, the latter are still favoured by the many struggling with significant price increases in e.g. Council tax, food and energy bills. On energy bills, the response from one of the major suppliers is that ?wholesale energy, the delivery to homes, and government-imposed levies ? endorsed by all the major parties ? all cost more than last year. » A serious policy response to this is required from the government rather than a populist reaction.

Perhaps the real question is what policy message would the centre-left, swing voters like to hear in the must-win, marginal constituencies currently held by Labour or the Liberal Democrats and targetted by the 40:40 campaign to win in 2015?

David Cameron: Green taxes review to help struggling families
Ed Miliband : This is my vision for building a new future for Britain