Recession, inflation and interest rates

LaPennaBianca

Well-known member
Interest rates up to 1.75%. Inflation set to peak higher and later at 13%, still at 9% next year. A recession predicted that will last 5 quarters, as long as 2008 and GDP set to shrink by 2.1%.

Sunlit uplands.


 
I don't get how the interest rate hikes will curb inflation when it is being driven by energy and fuel prices. It just seems like the BoE are now being hard to be seen to be doing something.

Could the Government just slash inflation by simply applying a cap on energy prices (like the French did) that minimised the price increases. They could also cut fuel duty.

I would love it if someone with a better understanding of economics could explain to me (apart from Tory ideology) why this wouldn't work or why they aren't doing it?

I suspect they need the extra money on fuel duty etc to pay for the increase public debt costs?
 
I don't get how the interest rate hikes will curb inflation when it is being driven by energy and fuel prices. It just seems like the BoE are now being hard to be seen to be doing something.

Could the Government just slash inflation by simply applying a cap on energy prices (like the French did) that minimised the price increases. They could also cut fuel duty.

I would love it if someone with a better understanding of economics could explain to me (apart from Tory ideology) why this wouldn't work or why they aren't doing it?

I suspect they need the extra money on fuel duty etc to pay for the increase public debt costs?
It won't work but they are doing it because other countries (mainly USA) are doing it and if we didn't our currency devalues and we buy those expensive things from abroad so it's really just a way to stop those high costs getting higher.

Raising interest rates will not curb spending because the high energy bills are already doing that.
 
Raising interest rates will not curb spending because the high energy bills are already doing that.

Yeah, and the big problem is as energy increases we have to pay for it and that keeps driving the figure up and up.

I can't see why they don't just cap the energy prices and that will in turn calm inflation. It seems so obvious - there must be a glaring reason why they aren't doing it?
 
Yeah, and the big problem is as energy increases we have to pay for it and that keeps driving the figure up and up.

I can't see why they don't just cap the energy prices and that will in turn calm inflation. It seems so obvious - there must be a glaring reason why they aren't doing it?
Capping the costs for the customer means the suppliers would go bust or the government would have to subsidise the suppliers. Even if they could afford to do it for households then businesses are another matter. Businesses have huge energy costs which is what is causing price inflation for everything else.

The government will also be happy they they are bringing in huge amounts of tax because of the highest prices.

Mainly though, they just don't care. They believe in free markets. Energy companies making massive profits is working for them. They have no interest in helping people that can't help themselves.
 
Just picked this up on social media.

So... let me get this straight:

* British Gas made a profit of £1.3bn between January & June
* BP announced profits of £6.95 billion between April and June alone
* Shell has profited by £9.4bn in a year

The MEN at the top:
* John Pettigrew, boss of National Grid received £6.5m bonus on top of his salary
* Chris O’Shea, chief executive of British Gas owner Centrica was paid almost £2m last year in salary and benefits
* Centrica's non-executive directors were paid almost £1m
* Scottish Power's CEO Keith Anderson is on £1.15m.
* E.On boss Michael Lewis is on £1m
* EDF's Simone Rossi is also on £1m
* And their top execs enjoyed a share of £4.65m
* Peter Simpson of Anglian Water earned a £1.3m pay package
* Welsh Water bosses awarded themselves bonuses of over £930,000
* Severn Trent bosses awarded themselves bonuses of £5.56m

* Thames Water's Sarah Bentley, received a £727,000 bonus on top of her £2m annual salary

Meanwhile there are...

* People who haven't had breakfast and/or lunch TODAY, because they can't afford it.
* People using FoodBanks because food is becoming more of a luxury than a necessity.
* Children celebrating a birthday without presents.
* Parents worrying about new school uniforms - and some schools enforcing rules which are not cost-effective.
* People who can't get to work because they can't afford to put petrol in their cars/pay for public transport anymore.
* People who are working so much they're making themselves ill, and they STILL CAN'T AFFORD to pay their bills.
* People who have been given fines by these same energy/water companies because they couldn't afford to pay their bills in the first place - increasing their debt.
* Customers being told to do STAR JUMPS TO KEEP WARM for crying out loud!
* Hose pipe bans when gallons of water leak away everyday.
* Elderly people NOT DRINKING because they're worried about running out of water!!!

All this and energy prices are set to rise up to 75% in October...

THIS IS MADNESS!.. I'm all for supporting profits ..I'm not for supporting greed at the cost of lives of others..

Something needs to change..

Why are customers' money being used to make life more comfortable for those who are making life more intolerable for the rest of us?
 
I don't get how the interest rate hikes will curb inflation when it is being driven by energy and fuel prices. It just seems like the BoE are now being hard to be seen to be doing something.

Could the Government just slash inflation by simply applying a cap on energy prices (like the French did) that minimised the price increases. They could also cut fuel duty.

I would love it if someone with a better understanding of economics could explain to me (apart from Tory ideology) why this wouldn't work or why they aren't doing it?

I suspect they need the extra money on fuel duty etc to pay for the increase public debt costs?
They're just trying to lower demand, all across the board, so wealthy people save, rather than spend, which should bring prices down a degree. It's no good for those who are worse off though, as they have nothing to save, and have to spend every penny they have (and more) to survive, and inflation or high interest rates gives them less.

Can't cap what you don't own/ produce (which is about 25-30% of it), and they're probably wary of ******* off the energy producers as there's going to be big problems come winter. It's the producers making the cash mind, not really the distributors/ people we pay. They should be applying a windfall tax on UK producers though (and everywhere else should do the same), and use it to subsidise the worse off even more. The French own most of their own energy, especially electric as they have loads of nuclear. We have quite lot of renewables, solar isn't great in winter, but wind is, and we have more wind.

We could do with a drive to get companies and people to cut down on their energy use, which would lower demand and lower costs, but it only really works if every country does it, but saying that, the EU are going to do it/ doing it. We probably won't, as the Tories will use it as a stick to try and say "look, we don't need to cut energy, like the EU are", and most won't realise it's that mindset which is making everything cost more.

They probably need the duty to cover for other economic losses which they've brought on themselves to appease the far right/ rich. There's also the cost of Covid etc.

It's not all the Tories fault, but a hell of a lot of it is, or at best they have just significantly compounded it, and they're going to make the worst off pay for it, like they always do.

A years worth of recession won't do them any favours in the polls, and it will be slow growth after it.

Tough times ahead, especially for those who have it more than tough enough already.
 
Just picked this up on social media.

So... let me get this straight:

* British Gas made a profit of £1.3bn between January & June
* BP announced profits of £6.95 billion between April and June alone
* Shell has profited by £9.4bn in a year

The MEN at the top:
* John Pettigrew, boss of National Grid received £6.5m bonus on top of his salary
* Chris O’Shea, chief executive of British Gas owner Centrica was paid almost £2m last year in salary and benefits
* Centrica's non-executive directors were paid almost £1m
* Scottish Power's CEO Keith Anderson is on £1.15m.
* E.On boss Michael Lewis is on £1m
* EDF's Simone Rossi is also on £1m
* And their top execs enjoyed a share of £4.65m
* Peter Simpson of Anglian Water earned a £1.3m pay package
* Welsh Water bosses awarded themselves bonuses of over £930,000
* Severn Trent bosses awarded themselves bonuses of £5.56m

* Thames Water's Sarah Bentley, received a £727,000 bonus on top of her £2m annual salary

Meanwhile there are...

* People who haven't had breakfast and/or lunch TODAY, because they can't afford it.
* People using FoodBanks because food is becoming more of a luxury than a necessity.
* Children celebrating a birthday without presents.
* Parents worrying about new school uniforms - and some schools enforcing rules which are not cost-effective.
* People who can't get to work because they can't afford to put petrol in their cars/pay for public transport anymore.
* People who are working so much they're making themselves ill, and they STILL CAN'T AFFORD to pay their bills.
* People who have been given fines by these same energy/water companies because they couldn't afford to pay their bills in the first place - increasing their debt.
* Customers being told to do STAR JUMPS TO KEEP WARM for crying out loud!
* Hose pipe bans when gallons of water leak away everyday.
* Elderly people NOT DRINKING because they're worried about running out of water!!!

All this and energy prices are set to rise up to 75% in October...

THIS IS MADNESS!.. I'm all for supporting profits ..I'm not for supporting greed at the cost of lives of others..

Something needs to change..

Why are customers' money being used to make life more comfortable for those who are making life more intolerable for the rest of us?
Why does the boss of National Grid get a 6.5m bonus, when selling energy at high rates is like shooting fish in a barrell at the minute? He's not done that, the world market has. Don't see how he deserves that on top of his salary.
 
Capping the costs for the customer means the suppliers would go bust or the government would have to subsidise the suppliers. Even if they could afford to do it for households then businesses are another matter. Businesses have huge energy costs which is what is causing price inflation for everything else.

The government will also be happy they they are bringing in huge amounts of tax because of the highest prices.

Mainly though, they just don't care. They believe in free markets. Energy companies making massive profits is working for them. They have no interest in helping people that can't help themselves.
Funny how they changed their tune in 2008 when they quantitively eased and printed hundreds of billions of pounds which they handed to their pals in the banking sector who kept it for themselves. I wonder if they would print some spare cash for me or you next time we fall on hard times 🤷
 
Capping the costs for the customer means the suppliers would go bust or the government would have to subsidise the suppliers. Even if they could afford to do it for households then businesses are another matter. Businesses have huge energy costs which is what is causing price inflation for everything else.

The government will also be happy they they are bringing in huge amounts of tax because of the highest prices.

Mainly though, they just don't care. They believe in free markets. Energy companies making massive profits is working for them. They have no interest in helping people that can't help themselves.

Would they go bust now they are sat on large profits? And what if they did go bust? Couldn't the Gov just fund them to break even or even if they all failed just take it back into public ownership?

I don't believe for one minute though that British Gas, for example, would go bust even if the Gov refused to help them. Centrica are massive. And companies like EDF are having to bear it in France - why can't companies do the same here?

(Don't get me wrong, the Tories would never take them back public but if they all went bust it would be a really cheap way to do it)

I'm not trying to argue btw, just looking to understand it a bit more (y)
 
Just picked this up on social media.

So... let me get this straight:

* British Gas made a profit of £1.3bn between January & June
* BP announced profits of £6.95 billion between April and June alone
* Shell has profited by £9.4bn in a year

The MEN at the top:
* John Pettigrew, boss of National Grid received £6.5m bonus on top of his salary
* Chris O’Shea, chief executive of British Gas owner Centrica was paid almost £2m last year in salary and benefits
* Centrica's non-executive directors were paid almost £1m
* Scottish Power's CEO Keith Anderson is on £1.15m.
* E.On boss Michael Lewis is on £1m
* EDF's Simone Rossi is also on £1m
* And their top execs enjoyed a share of £4.65m
* Peter Simpson of Anglian Water earned a £1.3m pay package
* Welsh Water bosses awarded themselves bonuses of over £930,000
* Severn Trent bosses awarded themselves bonuses of £5.56m

* Thames Water's Sarah Bentley, received a £727,000 bonus on top of her £2m annual salary

Meanwhile there are...

* People who haven't had breakfast and/or lunch TODAY, because they can't afford it.
* People using FoodBanks because food is becoming more of a luxury than a necessity.
* Children celebrating a birthday without presents.
* Parents worrying about new school uniforms - and some schools enforcing rules which are not cost-effective.
* People who can't get to work because they can't afford to put petrol in their cars/pay for public transport anymore.
* People who are working so much they're making themselves ill, and they STILL CAN'T AFFORD to pay their bills.
* People who have been given fines by these same energy/water companies because they couldn't afford to pay their bills in the first place - increasing their debt.
* Customers being told to do STAR JUMPS TO KEEP WARM for crying out loud!
* Hose pipe bans when gallons of water leak away everyday.
* Elderly people NOT DRINKING because they're worried about running out of water!!!

All this and energy prices are set to rise up to 75% in October...

THIS IS MADNESS!.. I'm all for supporting profits ..I'm not for supporting greed at the cost of lives of others..

Something needs to change..

Why are customers' money being used to make life more comfortable for those who are making life more intolerable for the rest of us?
I agree 100%.

But there is only ONE way this will change: violent revolution. Mainly because those with money would react to any attempt to take it back with violence.
For years I totally rejected the idea of a violent revolution but, with age, I have realised, very sadly, that it's the only means the lower classes have of bringing about serious change. History shows this time and time again.
 
If we get a bad winter this year, then millions are going to be completely screwed, more than they already are.

I suppose anyone (which might be a lot of us) who isn't going to struggle as much as some should do what they can to cut down on their energy demand/ use. It's small scale, but if everyone did it, then it would make a big difference. That might be things like turning off the central heating in rooms they rarely use, turning it off when they're out and putting up with a cold house for a bit when they get home, turning the thermostat down a couple of degrees, shorter showers, turn the hot tub off, energy saving light bulbs etc. Just because people can afford to use the energy, doesn't mean they should etc. Loads of people don't have those luxuries anyway, and loads will be forced into all of it, but even those that aren't can still help.
 
Would they go bust now they are sat on large profits? And what if they did go bust? Couldn't the Gov just fund them to break even or even if they all failed just take it back into public ownership?

I don't believe for one minute though that British Gas, for example, would go bust even if the Gov refused to help them. Centrica are massive. And companies like EDF are having to bear it in France - why can't companies do the same here?

(Don't get me wrong, the Tories would never take them back public but if they all went bust it would be a really cheap way to do it)

I'm not trying to argue btw, just looking to understand it a bit more (y)
The French government are taking back the bit of EDF which was in private hands.
 
Neoliberalism economics has been adopted globally. The old stinking tory bitch started it over here, reagan did the same over the pond at the same time. They sold everything. Opened every aspect of human life to business and profit. even down to the water we drink.
We have had government after government getting to power only because they sucked the corporate coc.ks. Blair did it and sold the labour party down the river. as well as making himself the first British President. Starmer is the new Blair.
So, even voting wont help. Unless we all vote green.
 
Would they go bust now they are sat on large profits? And what if they did go bust? Couldn't the Gov just fund them to break even or even if they all failed just take it back into public ownership?

I don't believe for one minute though that British Gas, for example, would go bust even if the Gov refused to help them. Centrica are massive. And companies like EDF are having to bear it in France - why can't companies do the same here?

(Don't get me wrong, the Tories would never take them back public but if they all went bust it would be a really cheap way to do it)

I'm not trying to argue btw, just looking to understand it a bit more (y)
It's the producers making the money, with no risk, not so much the suppliers, and I suppose the latter have a high risk of going broke if they sell at a loss or a tighter margin.

I don't think it would be legal to force a company to sell it at a loss, so you can then make it fail and then take ownership of it. A lot of the problem we have now is because loads of the smaller firms went broke, and only the larger ones could absorb the customers.

EDF is 85% owned by the French Government, so they can probably do what they like in France, and they also supply us, so can charge us what they like.
 
I run a summer business (ecommerce garden products).
We sell nationwide and demand has dried up this year (down 50% on last yr, bit below 2019).
Not sure whether it's the cost-of-living crisis or if there was so much 'lockdown demand' that our market was simply saturated.
Many retailers make their cash in the fourth quarter - spring/summer is quiet for many.
IF sales dry up across a other markets like they have for us its going to be a very bumpy ride for the retail sector (online & offline).

13% inflation forecast....and this is for a carefully controlled 'basket'.....looking like 20% for the average man on the street. Horrendous.
 
Back
Top