The press, government, financial columnists and the Bank of England all seem to be willing us toward an increase in the base rate but why?
The press, government, financial columnists and the Bank of England are all dabbling in the world of real politics and seem to be willing us toward an increase in the base rate but why, I know the Bank of England are responsible for keeping inflation under control and their main instrument is interest rates but its only effect will be more misery for those with loans/mortgages and no impact on inflation.
The current level of inflation is partly government inflicted because of the VAT increase and the scandalously high level of government duty on petrol and diesel, this contributes to:
- Although I think VAT at the current level is here to stay it was an instant 2,5% increase across the non-VAT exempt board
- The government have to cut their take on fuel by 25%+, the cost of fuel is driving hauliers out of business, increasing haulage costs, increasing shop prices and putting a severe brake on job creation.
The only effect increasing interest rates would have is to make the above worse, the government has to act on fuel duty, any loss in revenue would be easily made up by increased revenue from taxation, a surge in employment opportunities and the revitalisation of the haulage sector.
The other obvious thing driving inflation is of course oil, for an example, went into my local Fish & Chip shop last night and he was telling me just a short while ago he was paying