Rishi Sunak has claimed there’s nothing he can do about the external global circumstances driving the cost of living crisis, but he’s dodged the real question: how can he best respond, and avoid an escalating crisis and a costly recession? In fact, there are fair, green solutions to this crisis staring us right in the face.
Consumer spending drives the economy. If people are struggling to pay their gas bills, they have less money in their pockets to spend on the high street or a restaurant meal. Which is why, as the CBI’s director general, Tony Danker, has said, Sunak’s first step should be investing in social security via increases in universal credit and legacy benefits to prevent families falling into destitution. This would also help to stabilise the economy, not fuel inflation.
We’ve got inflation. So, sending more of the economy to those who spend all their cash, not save any of it, will not fuel inflation?
Umm, now wait a minute. When we’ve a recession, then we’re told that we should send money to the poorer because this supports demand because they spend it all, not save any of it. Inflation is the opposite of a lack of demand – it cannot be true that the answer is the same then, can it?
Second, we need a serious industrial strategy to boost confidence
Presumably a strategy designed by those who perform the above failure of macroeconomics?
Third, rather than continuing to slip on our green ambitions, we must double down. Every home newly insulated and each wind turbine erected across the UK will reduce household fuel bills. We need to make this investment before 2050 anyway – so let’s do it now, to support the economy and bring down electricity bills sooner. As Danker said, non-inflationary, green investment opportunities
Why is increasing demand through greater investment not inflationary?
In fact, companies can reduce their profits too, to keep prices down
We should increase investment by reducing profits.
Instead of forcing workers to take the strain, companies should show profit restraint and cut their dividend payouts.
We should beat inflation by raising wages?
Finally, as fossil fuel companies pile up huge, unexpected profits from the very crisis that is pushing millions into absolute poverty, it’s fair for the government to redistribute these into welfare and income support.
We’re going to tax supply at a time of dearth.
As I’ve said before about folks at the IPPR it’s amazing that they remember to breathe at times.