Bank rate up to 5%

Yeah because people aren't suffering enough, lets just stuff them with another interest rate rise that the greedy bastard banks and building societies can pass straight on to their borrowers whilst sitting on any rate rise for their savers. I'm sure that will help stop people asking for pay rises to try to pay their constantly rising bills and will drive down inflation in no time.
 
An underlying factor is the shortage of labour caused by Brexit. With almost full employment wage rises must be given and traders can ask for more when quoting for jobs. All of which feeds into the inflationary spiral. Putting interest rates up has little or no effect on this structural problem.
 
ElBurroSinNombre said:
An underlying factor is the shortage of labour caused by Brexit. With almost full employment wage rises must be given and traders can ask for more when quoting for jobs. All of which feeds into the inflationary spiral. Putting interest rates up has little or no effect on this structural problem.
Click to expand...
Austria's at 9%, Iceland 9.5%, Sweden 9.7%, most of Eastern Europe (where the workers were coming from) is over 10%, please explain to me how Brexit is causing that.
 
Yorkshire BS are usually fairly quick in changing the amount they pay savers. I've just had a Govt Bond matured and stuck it in one of the YBS accounts. Pretty good return from YBS, lousy return from the Govt bond.
 
Curryman said:
Yorkshire BS are usually fairly quick in changing the amount they pay savers. I've just had a Govt Bond matured and stuck it in one of the YBS accounts. Pretty good return from YBS, lousy return from the Govt bond.
Click to expand...
Waiting for the 3 year bond to go higher stuck at 4.2% since February.
 
Lala said:
Apparently a massive factor is actually the printing of extra money during the pandemic and then not acting quick enough in raising interest rates when it was needed.
Click to expand...
To stimulate jobs and wealth you can either print money and give it the city to play with or you can do public projects like build roads, schools hospitals etc.

It has always been thus.

Guess which one the Govt chose to do and guess which one creates the least jobs and causes the most inflation?

#supplysideeconomics #nosetroughery
 
ElBurroSinNombre said:
An underlying factor is the shortage of labour caused by Brexit. With almost full employment wage rises must be given and traders can ask for more when quoting for jobs. All of which feeds into the inflationary spiral. Putting interest rates up has little or no effect on this structural problem.
Click to expand...
Explain food inflation which is higher in Italy than here. Italy is in the EU.🤔
 
Last edited:
Lost Seasider said:
Austria's at 9%, Iceland 9.5%, Sweden 9.7%, most of Eastern Europe (where the workers were coming from) is over 10%, please explain to me how Brexit is causing that.
Click to expand...
Other countries have different structural problems and subsequently have different rates of inflation.
Is that really so difficult to understand?
There is currently a shortage of labour in the UK, that leads to wage inflation, that is just a fact. One of the major causes of the shortage is Brexit , again, that is another undeniable fact.
Here is the director of the BoE on the subject today basically telling us that the wage inflation needs to stop;

news.sky.com

Inflation: Current price and wage increases 'are unsustainable', says Bank of England's Governor Andrew Bailey

As the Monetary Policy Committee has unanimously and unexpectedly agreed to raise the Base Rate by 50 basis point, the governor of the Bank of England, Andrew Bailey has reiterated the need to restore price stability.
news.sky.com news.sky.com
 
I’m a bit baffled, unemployment is 3.8%, which is pretty low, so where is the shortage of labour? Obviously there will be in different sectors, but that’s always the case.
 
ElBurroSinNombre said:
Other countries have different structural problems and subsequently have different rates of inflation.
Is that really so difficult to understand?
There is currently a shortage of labour in the UK, that leads to wage inflation, that is just a fact. One of the major causes of the shortage is Brexit , again, that is another undeniable fact.
Here is the director of the BoE on the subject today basically telling us that the wage inflation needs to stop;

news.sky.com

Inflation: Current price and wage increases 'are unsustainable', says Bank of England's Governor Andrew Bailey

As the Monetary Policy Committee has unanimously and unexpectedly agreed to raise the Base Rate by 50 basis point, the governor of the Bank of England, Andrew Bailey has reiterated the need to restore price stability.
news.sky.com news.sky.com
Click to expand...
So your solution to a cost of living crisis is to prevent anyone getting wage rises, even though most of the inflation is being driven by external factors.

Interesting logic.
 
It might have been better to actually have built those 40 hospitals that Boris promised rather than Quantitative easing the same level of money into hedge funds.

With low unemployment both would have created inflation however at least the hospitals would have left us with a legacy and a feel good factor as opposed to a load of Gordon Geckos pocketing it and buying Rolex’s
 
ElBurroSinNombre said:
Other countries have different structural problems and subsequently have different rates of inflation.
Is that really so difficult to understand?
There is currently a shortage of labour in the UK, that leads to wage inflation, that is just a fact. One of the major causes of the shortage is Brexit , again, that is another undeniable fact.
Here is the director of the BoE on the subject today basically telling us that the wage inflation needs to stop;

news.sky.com

Inflation: Current price and wage increases 'are unsustainable', says Bank of England's Governor Andrew Bailey

As the Monetary Policy Committee has unanimously and unexpectedly agreed to raise the Base Rate by 50 basis point, the governor of the Bank of England, Andrew Bailey has reiterated the need to restore price stability.
news.sky.com news.sky.com
Click to expand...
He can say that when he earns about £500k/yr and has failed miserably to keep inflation at 2%.
 
I fixed my mortgage 2 years ago at <1.69% for 5 years. I seriously thought about 10 years as it was inevitable interest rates were going to rise.

The only reason I didn't was the fact that I couldn't trust that or circumstances wouldn't change in 10 years.

If we are only going to use interest rates to control inflation, we could and should have been raising rates earlier.

I think the rate of interest will shock us into recession as anyone like me with low rate is going to do as much as they can to minimise the future damage - anyone who is on the SVR is going to be hammered now and will not be able to afford to do much else than keep a roof over their head of they are lucky.

Personally, I think there's an argument that a slightly higher rate of tax to take money out of the economy and being used for something else is a better alternative, but bit what do I know.

The only bright spot I can see is lots of irresponsible private slum landlords are getting stung.
 
TSSeasider said:
I fixed my mortgage 2 years ago at <1.69% for 5 years. I seriously thought about 10 years as it was inevitable interest rates were going to rise.

The only reason I didn't was the fact that I couldn't trust that or circumstances wouldn't change in 10 years.

If we are only going to use interest rates to control inflation, we could and should have been raising rates earlier.

I think the rate of interest will shock us into recession as anyone like me with low rate is going to do as much as they can to minimise the future damage - anyone who is on the SVR is going to be hammered now and will not be able to afford to do much else than keep a roof over their head of they are lucky.

Personally, I think there's an argument that a slightly higher rate of tax to take money out of the economy and being used for something else is a better alternative, but bit what do I know.

The only bright spot I can see is lots of irresponsible private slum landlords are getting stung.
Click to expand...
Same. Fixed mine for 10yrs at a time just before the super brains on here were saying inflation is transitory 🤡 and obscene money printing has "confounded the experts" 🤡🤡.

Oh well... Play stupid games, win stupid prizes.
 
As the above mentions a hell lot of people fixed their mortgages for five years so the increases won't stop them.spending which is the premise for interest rate rises. I could be the Governor of the Bank of England if that's all he's got as a solution
 
It is baffling that they think this is the way to stop inflation. Food (20%) and energy (200%) prices have risen in the last two years. There is a massive shortage of labour, in our village virtually every business is advertising for staff, so those available will take higher offers. The professions have seen wages shrink in real terms over the last 13 years. Mortgages are rising faster than wages by a country mile, affecting owners and renters. It appears that the establishment is so blinkered, they think there is only one tool to reduce inflation.

Exactly how does forcing defaults on mortgages reduce inflation? Many are really struggling already, they simply do not have the spare cash to pay.

A member of the Chancellor's team is quoted as saying they need to push the UK into recession to reduce inflation. WTAF?
 
Old_Laytonian said:
As the above mentions a hell lot of people fixed their mortgages for five years so the increases won't stop them.spending which is the premise for interest rate rises. I could be the Governor of the Bank of England if that's all he's got as a solution
Click to expand...
It's an outdated way of trying to curb inflation probably now come to the point sadly now where a recession will be the best way out of it. 👎
 
Old_Laytonian said:
As the above mentions a hell lot of people fixed their mortgages for five years so the increases won't stop them.spending which is the premise for interest rate rises. I could be the Governor of the Bank of England if that's all he's got as a solution
Click to expand...
TBF; it's his only tool really.

The government need to think about what they can do to help - and I'm not sure they have the ability or will to do anything about it.

Artificially low wages due to immigration, QE on a scale which was off the charts due to over-lending prior to 2007, housing as investments rather than places to live, Covid furlough, Ukraine and profiteering are all coming home to roost.
 
Lost Seasider said:
So have you established to what extent the UK's inflation is down to Brexit and labour shortages? Is it 50%?

Have you established to what extent UK wages are outpacing our European neighbours?
Click to expand...
All of this scepticism and 'told you so' stuff gets us nowhere. It's time to look at all of the structural issues - yes, Brexit is one of them - and think about solutions. I haven't got a magic wand but I do feel that a big capital investment programme that includes house building will help to tackle the cost of living crisis.
 
the problem is that most governments have a pre 1970's view of economic models and the tools available to them. When most jobs were productive, the banking system operated on financial internediary system (money from savers funded loan programmes) and a high proportion of capital was used for productive purposes the link between wages, inflation and interest rates was more grounded.

in todays economy where a majority of the economy and close to half of all jobs (UK) is non-productive and the fractional reserve system is the base of all banking (if not the credit creation system) where borrowed money is literally created out of thin air and then not properly underwritten by central banks, and most bank finance goes to asset growth the presumed connections between wages, inflation and interest rates are just not there.

interest rates have been manipulated downwards for 40 years to fund consumer consumption and basic business operations.

Asset growth which has been running at multiples of the published inflation rates has always been hailed as a good thing, but it is now becoming apparent that asset growth is an inflationary factor.

the sum of all this to get to a point of view is that the fantasy land of continual economic growth practiced over the last 40 to 50 years is simply bumping up against reality, too much debt, not enough productivity (by that i mean jobs being in areas of non production or non productive services, not workers being unproductive), and a majority of jobs being low paid and insecure, with workers having little or no capacity to grow wealth.

brexit, labour shortages, the pandemic, a decade and a half of austerity, the financial collapse, have all been bumping up against the economic fantasyland for a long time and they have all contributed to a bursting bubble.

No modern economic adviser to a government or a central bank will accept or cannot concieve that reigning in markets, asset growth and maybe even shrinking the economy could be the answer, which it probably is.
 
bfcpete said:
I remember when interest rates were about 15% and mortgages a much bigger proportion of household income. People don't know how lucky they have been over the last 20 years, with cheap borrowing and credit
Click to expand...
a household mortgage at 12 -15% in the 60s and 70s was still only a third of household annual income and typically was for between 15 and twenty years, a typical mortgage in the UK is now between 50 and 70% of typical household income, and the average mortgage is now funded by two wage earners not one, and will be more likely to be over thirtty to forty years and will probably be additionally secured on parents and/or grandparents home equity.
 
Costero Poderoso said:
a household mortgage at 12 -15% in the 60s and 70s was still only a third of household annual income and typically was for between 15 and twenty years, a typical mortgage in the UK is now between 50 and 70% of typical household income, and the average mortgage is now funded by two wage earners not one, and will be more likely to be over thirtty to forty years and will probably be additionally secured on parents and/or grandparents home equity.
Click to expand...
If a mortgage repayment is taking 50 to 70% of a household income then people are borrowing too much. That’s a crazy amount.

My mortgage has never ever been anywhere near that amount of my household income and there is only one of me !
 
Lala said:
Apparently a massive factor is actually the printing of extra money during the pandemic and then not acting quick enough in raising interest rates when it was needed.
Click to expand...
We've been printing money en-masse since the credit crunch recession of 2008.
 
Anyway not to worry, on the BBC website there are ‘tips’ on how to cope with mortgage increases, which follows in the footsteps of ‘tips’ for coping with food price increases, which follows in the footsteps of ‘tips‘ for coping with increases in gas prices, which followed in the footsteps of ‘tips’ for coping with increases in electric prices, which followed in the footsteps of ‘tips’ for coping with increases in water charges. How much more coping can young families take, they’re squeezed to the max, I feel so sad for them.
 
Plenty of folk on here - I'm not singling out any individuals but you all know who you are/were - were of the opinion that we were too soon to lockdown and too quick to come out of lockdown.

Please don't get me wrong, you were perfectly entitled to hold such an opinion but don't go moaning when the bill comes through.
 
groundsman said:
You do all know this government alone wasted £500 billion on covid garbage. What way do you think the government want their cash back?
Click to expand...

You are not wrong Groundsman but what annoys me is how much was wasted - both honestly on dishonestly - on procurement, Test and Trace, etc during the pandemic.

Locking down the country for as the long as they did was ridiculous, more young and healthy folk died of drowning than of Covid, they should have been issuing armbands not masks and vaccines !!!!!!!!!!!!

McDonalds were OK to open up but gymnasiums had to shut, you were OK to go to the boozer and have a skinful as long as you had a scotch egg but not if you didn't, how the feck did we all put up with such nonsense ?????????
 
I’m not an economist as you will see, and I just don’t understand the philosophy of raising interest rates to curb inflation. From what I understand, the idea is by doing so, it reduces people’s disposable income, so they spend less. It then apparently follows that businesses will stop increasing prices. All this leads to rising unemployment, businesses going under and a recession. Surely, that leads to less income by way of tax for the government and increased costs in terms of benefits.

If, for example, Interest rates were reduced to zero, people would have more disposable income, which would lead to competition between businesses to reduce prices, meaning lower inflation. The government benefits by receiving more taxes and paying out less in unemployment benefits. I’m obviously wrong, but I don’t know why.
 
And why are house prices growing.

Scarcity.

And why are they scarce.

Population growth.

And why is the UK population growing (50m in 1950, 60m in 2005, 70m in 2023) at a time when birth rates are declining?

Immigration

And what else does immigration do

Supress wages as labour isn't scarce

Throw in our inability to build the infrastructure required to service that population growth and it's no wonder or public sector can't cope.

The Ponzi scheme of an economic system we appear to be fixated on means the only way we have growth is by increasing the consumer base rather than grow the wealth of the consumer base.
 
Costero Poderoso said:
the problem is that most governments have a pre 1970's view of economic models and the tools available to them. When most jobs were productive, the banking system operated on financial internediary system (money from savers funded loan programmes) and a high proportion of capital was used for productive purposes the link between wages, inflation and interest rates was more grounded.

in todays economy where a majority of the economy and close to half of all jobs (UK) is non-productive and the fractional reserve system is the base of all banking (if not the credit creation system) where borrowed money is literally created out of thin air and then not properly underwritten by central banks, and most bank finance goes to asset growth the presumed connections between wages, inflation and interest rates are just not there.

interest rates have been manipulated downwards for 40 years to fund consumer consumption and basic business operations.

Asset growth which has been running at multiples of the published inflation rates has always been hailed as a good thing, but it is now becoming apparent that asset growth is an inflationary factor.

the sum of all this to get to a point of view is that the fantasy land of continual economic growth practiced over the last 40 to 50 years is simply bumping up against reality, too much debt, not enough productivity (by that i mean jobs being in areas of non production or non productive services, not workers being unproductive), and a majority of jobs being low paid and insecure, with workers having little or no capacity to grow wealth.

brexit, labour shortages, the pandemic, a decade and a half of austerity, the financial collapse, have all been bumping up against the economic fantasyland for a long time and they have all contributed to a bursting bubble.

No modern economic adviser to a government or a central bank will accept or cannot concieve that reigning in markets, asset growth and maybe even shrinking the economy could be the answer, which it probably is.
Click to expand...
Great post.....nothing to add👏👍
 
TSSeasider said:
And why are house prices growing.

Scarcity.

And why are they scarce.

Population growth.

And why is the UK population growing (50m in 1950, 60m in 2005, 70m in 2023) at a time when birth rates are declining?

Immigration

And what else does immigration do

Supress wages as labour isn't scarce

Throw in our inability to build the infrastructure required to service that population growth and it's no wonder or public sector can't cope.

The Ponzi scheme of an economic system we appear to be fixated on means the only way we have growth is by increasing the consumer base rather than grow the wealth of the consumer base.
Click to expand...
Not sure immigration has had an impact as great as the increased life expectancy. In 1950 average life expectancy was 67 now it is 81 an additional 13 years that people aren't working and being supported. We now have a plummeting birth rate, it's a recipe for economic disaster and unless we have a sudden baby boom the only way to plug the gap is immigration.
 
TSSeasider said:
And why are house prices growing.

Scarcity.

And why are they scarce.

Population growth.

And why is the UK population growing (50m in 1950, 60m in 2005, 70m in 2023) at a time when birth rates are declining?

Immigration

And what else does immigration do

Supress wages as labour isn't scarce

Throw in our inability to build the infrastructure required to service that population growth and it's no wonder or public sector can't cope.

The Ponzi scheme of an economic system we appear to be fixated on means the only way we have growth is by increasing the consumer base rather than grow the wealth of the consumer base.
Click to expand...
And to add, housing scarcity lays firmly at govts door. In 1970 50% of new housing was good quality, affordable housing built by the state (council houses) how many have been built in the last 30-40 years and who is to blame for that?
 
Threepeaksphil said:
Simple way to bring down inflation insist that all the greedy supermarkets have a final “inflation” deduction of 5% at the end of customers bills and any that don’t charge them a special tax on their obscene profits. Perhaps try the same on garage fuel costs
Click to expand...
Heard Andrew Bailey (governor of the Bank of England) on the news yesterday complaining how they have to drive inflation down and he won’t think twice about raising the interest rate again if need be.
He blamed high wage rises that we’re adding to the cost of inflation but what he didn’t say was when he took over this position in 2020 his basic salary was £495,000 p/a so you can see why he’s against wage rises.
 
Last edited:
Lala said:
If a mortgage repayment is taking 50 to 70% of a household income then people are borrowing too much. That’s a crazy amount.

My mortgage has never ever been anywhere near that amount of my household income and there is only one of me !
Click to expand...
they are borrowing too much, its a fundamental problem, banks are often lending on the basis of payments being a proportion of monthly take home pay with the salary multipliers for mortgage size being very high which is inherently risky to the fianancial system. with low interest rates and extended loan times it brings the overall monthly payments down - but - still much higher than a third of household income. In 1965 the average house was about three times average salary. In most parts of the UK it is now between 7 and 12 times average salary. i read a report recently that had calculated that a young couple in certain parts of the UK would need 21 years just to raise the deposit based on disposable income, after rent, travel food bills etc are taken into account.

I've been looking at this problem for a long time, and every model we do where we align housing and wages to a sustainable model (within the current economic system), a majority of the working population have to take a huge financial hit.
 
You must log in or register to reply here.
Back
Top