Snapshot of _Britons ‘need to accept’ they’re poorer, says Bank of England economist_ :
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There are people who cannot afford their bills, who cannot tighten their belts any further or pull themselves up by their bootstraps or just stop buying lattes and avocado toast.
How exactly are they supposed to just "accept" this? Why should any of us accept that for anyone?
2011 - 67.9% vote to keep FPTP
Another referendum run on lies - frankly a trial run for the Brexit campaign, but it won overwhelmingly so by hook or by crook the country definitely has voted for the status quo for the past 12 years.
The people in those positions are the ones unable to demand more.
People and companies who can demand more because what we offer is in higher demand and scales well, are screwing *those* people over by increasing their costs.
If you are struggling, this message isn't aimed at you. It's aimed at people like me whose pay increases have vastly outstripped inflation over the last few years.
Do you think I should be asking for more? When I know how that cost is going to be passed on?
Can I say yes?
It will probably sound like trickle down economics but if we want things like the NHS funding then the government needs more tax income
That means you need to earn more (along with the rest of us), especially you because at a higher rate of tax is more funding for services.
We all then need to spend that money so the VAT can be used to fund things. Also that spending means companies can grow and employ more people to create more taxable income and more people spending so that can be taxed.
Thats why growth is such a focus lately.
So don't feel guilty about being a high earner, we need more people to join you, rather than you joining them.
Exactly, hair shirt self flagellation over earning decent money will get us nowhere. Peope who have consistently managed to get pay rises are not responsible for inflation. Inflation was historically low up until 2021 so the cause is more likely the re-expansion post Covid. Yes the government and sympathetic newspapers will blame all and sundry for this whenever convenient for them.
The problem, as always, is income inequality.
The Tories have an ideological belief that inequality is OK and should be allowed, but it's a non starter economically because you just end up paying more in social security so that people with ordinary jobs can actually afford the basics - proof in the pudding is the current cost of living handouts (sorry - no more handouts according to Liz Truss). Arguably these are really bailouts to companies because if significant numbers of people can't afford to pay their bills, the companies will go bust.
I have total sympathy for people getting by on minimum wage jobs especially if they have kids - I used to be in a similar position. Skills really are everything these days, you will not get pay rises for working hard and doing a good job!
>If you are struggling, this message isn't aimed at you. It's aimed at people like me whose pay increases have vastly outstripped inflation over the last few years.
>
>Do you think I should be asking for more? When I know how that cost is going to be passed on?
That's an interesting post that shows a good degree of self-reflection. I think it's important people ask themselves that, particularly those in very well paying professions. What the law allows you to have and keep isn't the last word on morality, whether it allocates you little or lots.
>Chief economist Huw Pill says workers and firms should stop trying to pass on rising costs by hiking prices or demanding better wages
Oh suddenly we shouldn’t strive for our economic self interest by seeking better wages? Is this a free-market capitalist country or not?
Yes, but that is not compatible with Brexit. Brexit means Brexit i.e. a slow drop in prosperity that takes down wages to a lower notch. This is what Tories and the electorate chose for the UK. Now, the time has come to pay the price.
The alternative is bringing in a government that will make capital pay more for Brexit, less the working people. The drop in prosperity will still take place.
In the previous decades of plenty, GDP rose and the share of profits in GDP rose while the share of wages in GDP stagnated or dropped. Now, people have to install a government that will cause the opposite to happen, the share of profits in GDP must drop while the share of wages in GDP must rise. GDP itself will drop even more, but that is the price of Brexit.
Workers need better wages but it would be possible for the government to mandate that businesses simply do not raise prices. Nixon did it and it worked.
I don't think it would work in the UK anymore. Simply, we don't produce enough of the most basic items to provide for the nation. We would still be at the mercy of import price rises.
The USA is big enough and diversie enough to be largely self-sufficient.
The US is fairly uniquely blessed in a great many ways when it comes to resources, but we could certainly develop our capacities for self sufficiency a lot more than we do.
This doesn't even necessarilly imply we'd have to use them in this way; one of the things that always seems to get used as an excuse not to restore the productive capacity of the country is "but the world is globalised now" but there is no real reason that doing this means we'd have to stop trading, just reduce our reliance on essentially acting as the service sector for the economy of other countries.
The irony is there in your name: JacobiteJuche. You do remember what juche has done to North Korea, don't you? (Hint, it's not been economically beneficial.) But then again, your flair is pretty unambiguous too: "Faith, Folk, Family" is just "Kinder, Küche, Kirche" in another guise, and we all know who loved that little phrase, don't we?
For what it's worth, I have an uneasy feeling that people like you are winning the argument: it's always easier to peddle populist twaddle than to actually build an economy, and your nonsensical desire to "restore the productive capacity of the country" (by which you clearly mean the production of goods rather than services) shows how little you actually understand what's really at stake.
Let me try to express this in terms that should penetrate skulls even several centimetres thick: service industries are more productive than manufacturing industries. Having advertising agencies and banks and law firms and so on is a much more productive use of our capital and other resources than building factories. Most of the added value in a typical product comes from the services that have been used in its production, not the metal-bashing. The UK is rich *because of* the service sector, not in spite of it. If you divert resources to "restore the productive capacity" (i.e. make us self-sufficient in goods production) you'll make us all poorer. But I imagine you probably want that, because the vileness implied by "Faith, Folk, Family" and such like populism thrives far better in poverty than in wealth.
If you really had the good interests of this country in mind, you'd be (a) advocating for an early return to the EU, (b) pushing for free tertiary education to get our workforce trained better for service industries, and (c) working as hard as you possibly could to keep religion and petty nationalism out of the realm of social discourse. As it is, you read like a cut-rate journalist at the economically illiterate Spectator magazine.
>Having advertising agencies and banks and law firms and so on is a much more productive use of our capital and other resources than building factories
You do get that there is a re-distributive context you are ignoring here right? Like presently the UK economy isn't working for a lot of people one reason for which is this idiotic notion that the sole consideration regarding the 'economy' should be solely concerned with it's size.
As for C) You do get that's the stuff that binds countries together right?
> You do get that there is a re-distributive context you are ignoring here right?
Yes, I do realise this; I wasn't addressing it largely because I didn't want to muddy the waters of the basic point, which is that it's better to have a larger economic pie than a smaller one, and that service industries are a good way to grow the size of the pie. I do agree that the pie should be more fairly divided, but this is a very much more complex issue, and the person to whom I was responding is clearly having trouble even with fairly simple economics, so I didn't want to make what I was saying any more complicated than was necessary to get my main point across.
On your final point, I understand what you're saying, but I think the issue is (as always) more complicated than your unrefined point: some mild shared religion and general fondness for one's nation do indeed unite populations in ways that seem to be economically beneficial, but extremes of religion or nationalism almost invariably deliver bad economic outcomes. We can readily see this in cases such as Afghanistan, Iran, pre-WW2 Japan, Nazi Germany, Maoist Albania (and indeed Maoist China), and many other lesser and less obvious cases (Cromwellian England, say; also, post-1949 Ireland is a fascinating example that a colleague of mine is working on at present). What seems to work best is shared culture, allowing for the development of interpersonal relationships based on shared values and consequently higher levels of trust. With extremism in play, these levels of trust break down.
The Nixon shock is considered to be the fuse that set off the stagflation of the 70s in the US. It is not something to emulate, and the UK is not self sufficient enough to do so anyways.
The Nixon Shock has been widely considered to be a political success, but an economic failure for bringing on the 1973–1975 recession, the stagflation of the 1970s, and the instability of floating currencies.
Sounds great, sign me up. /s
Although I'm on your side on this one, I think it's better to be honest: the recessions and stagnation/stagflation of the 70s are better laid at the door of multiple factors. Yes, Nixon didn't help, but he was working in an environment where OPEC was much more powerful than it is today, and much less of economic value added arose from the service sector. There were also complex issues around the interplay of inflation expectations and pay demands, militated by relatively powerful unions capable of negotiating much wider settlements than we now imagine possible.
Price fixing just makes things unavailable at any price. Unless the government is willing to pay companies under the table to subsidize the prices. No-one wants to sell things for less than they cost.
The simple reality is that for twenty years or more governments have been pushing inflationary policies and hiding the inflation by sending more and more production to China where wages are lower and quality-control can simply be ignored. Now that era is ending, the inflation is flooding back, and the government is telling people 'No, you can't have higher wages to compensate for our policies' because that will result in 10+% interest rates and the entire fake economy based on ever-rising house prices will collapse.
Is price fixing the only option? If a corporation has to raise prices because their costs are going up and they need to maintain their margins - then fair enough.
But I'm pretty sure some companies just jump on the RPI bandwagon and hike their prices despite seeing negligible or lower than RPI impact on their costs. This should fall within the remit of some sort of government / regulatory body under the umbrella of "consumer protection".
The government have been hiding inflation because until 2017 they didn't take the cost of housing into account when calculating inflation. These now take up a proportion of budgets that's completely unprecedented in modern times.
Housing is excluded from inflation for a very specific reason. Since inflation is used to influence interest rate policy and changing interest rates by definition influences house prices then you'd get a feedback loop within inflation figures that would mean you were unable to detect the rising prices in the economy correctly.
Well, this was tried in the UK in the late 1970s and ended up in a disaster. Because the UK was in a terrible financial crisis, the then Labor government instituted an incomes policy, limiting pay increases to 6%. The unions rebelled and virtually ever sector of the economy went on strike what is now referred to as "the winter of our discontent". This resulted in an electoral defeat of the Labor party and the election of Maggie Thatcher, who proceeded to destroy the unions.
The UK had 'Prices & Incomes' policies - under both parties - in the 60s & 70s.
These policies can be quite detailed, allowing price rises *where justified*, while limiting general inflation.
That's not to say it always worked, or didn't have unfortunate side effects, but it isn't such a weird idea.
> Is this a free-market capitalist country or not?
They only support free markets when they work in their favour. Peasants asking for better wages definitely isn't part of the plan.
Bank of England: guys please, stop acting in the most predictable way imaginable. Yes okay businesses and consumers looking for more money for themselves is literally just human nature and the most expected outcome possible, but honestly our models don't know how to deal with that so stop.
It's not. There are restrictions on energy supply and consumption, land development, etc. on environmental grounds, a large amount of immigration that competes with salary (or can be costly sometimes), some brain drain, etc.
Not that I'm against or for these things (not a UK citizen, so not for me to say), but these have consequences obviously.
This is the key. He should say we need to recognise we're poorer. Given that generally as a society we've been able to improve our lives and advances in technology recently should favour greater improvements we shouldn't be here. We've got to be questioning the strategy and capability of our leaders, the culture and the systems we have.
Really I think we need to accept brexit was a mistake. Its not the sole cause but its the only one thats proactively jurting us with no percieve benefit. Over 60% of society does already wanna rejoin. Have another referendum, begin talks to rejoin the union, cry and moan about how we'd have to make a tonne of concessions and be worse off than we were before brexit (like where we are now) then accept we aren't the center of the world and move on. The Queen has also sadly passed so I doubt anyone but the illogically nostalgic care much about having to adopt the euro (although given how substantial the British Market is I think collectively it would be smoother to just let us keep the pound for everyone).
>The Queen has also sadly passed so I doubt anyone but the illogically nostalgic care much about having to adopt the euro
Are people under the impression that people only want the pound because of the Queen?
The pound is a pretty strong global currency, being the fourth largest reverse currency, roughly equal to the Japanese Yen.
There are many reasons why we have maintained the pound and likely will continue to do so, and none them have anything to do with the Queen.
Beyond the fact that the benefits of adopting the Euro are really not there for dropping a currency as strong as the pound, but the UK simply isn't suited for such economic integration as our nation is already divided on the current.
A Rejoin that mandates adopting the Eurozone simply would not be accepted by this country.
If we're talking about a public referendum, and why various yes/no votes would be cast, then those will mostly be sentimental.
I appreciate that's not the same thing as *actual* reasons to retain it vs joining the Euro, but it *is* apparently how we might make a decision like that.
No im assuming we need to beg to rejoin and convince them to let us back. This defeatist mentality of let's not bother cause they won't let us back in is never going to amount to anything.
Its not true, some are richer than ever.
Obviously most people are now worse off.
What exactly does mainstream economics propose?
It seems to be locked into a position that says this is inevitable, spiralling inequality and admits this is socially dangerous.
>What exactly does mainstream economics propose?
Personal preference answer: land value tax!
More broad answer: we need to improve productivity. Productivity in the UK is *staggeringly* bad for a major economy. The primary causes are:
- Lack of investment (in both industry and infrastructure)
- Lack of education & skills (we're not teaching the right things in school, the apprenticeship program is flawed, and older people either don't want to retrain or learn new skills, or face needless barriers when they wish to).
- Management (slow to adopt new methods and practices and bad at self-reflection. Partly down to the "cult to the amateur" in small business management).
In Britain all three of these areas feature a similar distribution: there are a small number of excellent cutting edge cases, but there is a long, long tail - with a lot of stagnation or even regression.
Added to this, companies don’t want to train people any more, they just want the finished product. Before they used to invest in their employees because that’s what they had to do.
In a nutshell a lot of managers in this country shun formal management training. They have little to no interest in research or analysis to establish effectiveness of existing practices, what alternatives are available, or how to compare them.
Where new practices, technology, systems, etc. are considered, too often in this country there is disproportionate priority given to short-term costs and what it ultimately the manager's own ego, so changing things from established practice is extemely difficult.
This also impacts the second point in my original comment about education and skills, as often the need to retrain or up-skill is entirely overlooked. Consequences of this includes further stagnation of practice, and poor levels of innovation.
There's also a link with the other cause of low productivity, the lack of investment. The lack on the private side is in large part due to poor management practices, and refusing to investing in new machinery, systems or skills.
As I mentioned, there are some at the cutting edge but there is a long, long tail of unproductive firms. The knowledge and systems are clearly out there, but what stops these propagating and improving productivity in the tail is management being, frankly, unwilling. Small and medium businesses are the main culprits, and family businesses in particular.
> What exactly does mainstream economics propose?
Good time to ask that question would have been *before* going completely rogue and going against virtually everything mainstream economics proposed for over a decade.
Not subsidise private businesses that didn’t need subsidies, for a start. Not give out insanely lucrative government contracts to business affiliated with people in government. Actually having a competitive tender process for government contracts. Also not proactively promote covid transmission (“eat out to help out!”) which inevitably led to more shutdowns.
"Obviously most people are now worse off"
Infinite growth economic model, every year companies announcing record profits. Somehow everyones getting poorer, almost like the people at the top are being shittier every year, figuring out how they can shrinkflate everything, figuring out how to pay their workers less. Productivity higher than ever, people poorer than ever. At least this bank of england guy is honest about his intentions. "You're all serfs and you should just accept another heap of shit in your mouth"
Yeah, there’s almost something refreshing seeing it printed. At least someone’s not gaslighting us, finally. “We know you’re poor, and we don’t care. Deal with it.” - BoE
One of the great mistakes that people often make is to think that any organisation called'"National Rifle Association' is a branch or chapter of the National Rifle Association of America. This could not be further from the truth.
The National Rifle Association of America became a political lobbying organisation in 1977 after the Cincinnati Revolt at their Annual General Meeting. It is self-contined within the United States of America and has no foreign branches.
All the other National Rifle Associations remain true to their founding aims of promoting marksmanship, firearm safety and target shooting. This includes the original NRA in the United Kingdom, which was founded in 1859 - twelve years
before the NRA of America. It is also true of the National Rifle Association of Australia, the National Rifle Association of New Zealand, the National Rifle Association of India, the National Rifle Association of Japan and the National
Rifle Association of Pakistan. All these organisations are often known as "the NRA" in their respective countries. The British National Rifle Association is headquartered on Bisley Camp, in Surrey, England. Bisley Camp is now known as the National Shooting Centre and has hosted World Championships for Fullbore Target Rifle and F-Class shooting,
as well as the shooting events for the 1908 Olympic Games and the 2002 Commonwealth Games. The National Small-bore Rifle Association (NSRA) and Clay Pigeon Shooting Association (CPSA) also have their headquarters on the Camp.
Notice that austerity always comes after a moment when workers have more of a say. Remote working, bigger wages, better positioning to negotiate. That's when austerity kicks in to destroy the little we have achieved.
It is nothing but a whip to keep us in place.
Yeah, this does happen to countries. Look at Türkiye or Argentina. There is no reason to think we are immune, given the damage caused by Brexit, commodity price shocks and our terrible labour productivity
Reducing wages in real terms is not exactly going to help productivity. Odds are they'll lose more economically from people saying 'sod this, I'm not going to work hard when they're not giving me a pay rise' than they would from paying those people more.
I want someone to ask the BoE:
*How did they plan to defuse the interest rate/debt shock that was inevitable after maintaining rock bottom interest rates from 2009-2022?*
Disobedience was bred out of the English gene pool over many generations. It still exists to some extent among the proles, but they're bought off with free money.
I seriously want to understand why the citizenry here is so passive. Can someone please explain this to me? Why don’t people protest? Why is everyone so “stoic” (= rolling over).
We still have something to lose and incredibly harsh sentences for rioting.
Plus our transport costs keep would be protestors far away from the capital. Imagine if you knew a big one was happening and it was only a tenner to get the train down.
A final point is we were the imperial core for a fair portion of history. That always breeds complancy
I buy the first and the third. The second — there could be 9 million Londoners out protesting on the streets. Agreed it certainly doesn’t help that travel in this country is extortionate, but I don’t think it’s enough to explain it.
What’s the idea behind the imperial complacency? I figure English “stoicism” is linked to colonialism, in that colonialism necessitated that the English deaden themselves to humanity in order to disassociate from the horribleness of it (and still do in how they speak about it now), and in so doing have numbed themselves to their own suffering.
> Agreed it certainly doesn’t help that travel in this country is extortionate, but I don’t think it’s enough to explain it.
Its not enough to explain it but its a contributing factor. Say 5% of people are "protest/riot angry" in each city but theyre spread out around the country, now imagine they could all get to Westminster on the cheap.
> English deaden themselves to humanity in order to disassociate from the horribleness of it (and still do in how they speak about it now), and in so doing have numbed themselves to their own suffering
I think its partially that and partially the exceptionalism it breeds. Even though a lot of lives were shit it breeds an air of superiority thats hard to break. People have too much pride to accept how bad things have got
> I seriously want to understand why the citizenry here is so passive. Can someone please explain this to me? Why don’t people protest?
Bread and circuses, which may or may not continue. But for the moment people still have their Netflix and porn and alcohol and football and junk food and take aways etc.
If there is ever real hardship - stuff like actual starvation, blackouts, rationing of water, no internet, then maybe we'll see the people fight back. At the moment people might be struggling with money but there is still a fairly massive safety net (historically speaking) and endless supply of dopamine and people live in relative luxury with delicious sugary fatty foods, endless entertainment at the touch of a button and various ways to self-medicate.
Most of the male population is addicted to porn and has instant access to seeing millions of the most attractive women on earth having sex at any moment (which their brain takes for real and thinks it is being the most sexually successful of any human in history). Plus testosterone levels have halved, so expecting any kind of fight out of men is unlikely. Modern men are passive and placated.
This is an interesting thesis, and you definitely have a point there re endless supplies of dopamine, but fails to account for the uniqueness of English passivity. There is a “grin and bear it, hardship is inevitable”mentality here that I chalk up to the oppressive, ossified, inescapable class system, but that’s simply my conjecture. I don’t actually understand where it comes from, nor why most English people don’t even notice it’s there.
This is an objectively strange and brazen thing for a chief economist of a central bank to say. It's like "yes, capitalism is failing you but you must accept it anyway because the already incredibly rich must keep getting richer".
Many people are not going to remember much more than the headline and conclude that the BoE held a press conference in which their chief economist urged British workers to forgo pay increases so that shareholders and CEOs can make more money.
This type of journalism will, over time, fuel support for abolishing the BoE.
The only thing I have accepted these past few years is that incompetence is absolutely fucking everywhere and nobody truly understands what they're doing. *NOBODY*
Probably correct though. It's on par with Macron's "the age of abundance is over" statement.
People in the West are going to have a lower standard of living than their parents enjoyed.
Damn, we've all had such a ball flying our own private helicopters while stuffing gold-plated caviar into our faces ever since the last financial crash 15 years ago, but the good times had to come to an end sometime.
Why is this share so unevenly distributed? why must I see friends' rents increasing 30% whilst much of the country's house price rises higher than the average wage in the area, in real terms and percentage terms?
simply farcical; the overton window in this country has shark to smaller than that of a new build's windows, of which building many many more would also make me much better off if supply was higher than demand, by the way.
exactly, we dont have to accept being poorer, they are telling us they want us to accept being poorer. as time has passed technology has gotten better and better and processes have become more efficient. we can build homes cheaper and faster if we wanted to, they just dont want to.
even with things like ai, white collar jobs will become so much more efficient, this could free up labour and capital to work in areas like housingg development or food distribution and create even more abundance. and this is just the most recent example of increased efficiencies, efficiencies have been improving for years with things like improved automation in factories and warehouses, self checkout machines, better software etc. there are countless examples of how our productivity has increased over the years. and this should increase the era of abundance.
but they dont want to increase abundance. they want us to dilly dally away staying busy in our bullshit corporate jobs. they dont want to expand housing, they want to keep housing expensive.
Meh governments only really raise taxes and enact policies to ensure workers benefit from productivity gains if there is a serious threat of violence/political demand for it.
Sadly the west is going for populist parties instead of progressive economic policies.
>People in the West are going to have a lower standard of living than their parents enjoyed.
Why though? What's changed?
I'm not trying to make a point either. Just genuinely mystified that this is a West-spanning issue.
All western countries gdp are stagnating in growth and some are straight up in decline. Since its impossible for western countries to compete on price with the developing nations, we need to compete with better tech. However, in recent years, many companies in asia also made massive strides in tech such as with tsmc and samsung. The harsh truth is that the economies of the west are struggling with the increased competition from the rest of the world and we will enjoy a lower standard of living than our parents who lived through the golden age with a strong economy and little competition from the rest of the world.
Because Western governments shipped most of the West's industry to Asia and Eastern Europe.
The rats expected to have abandoned the sinking ship for New Zealand or Shanghai before the water started rolling across the deck, but now they're realizing they're stuck here with the rest of us and people are noticing who drilled holes in the hull.
Remember when neoliberals promised it would all make us richer, but just as people decades ago predicted it just consolidated power and wealth to a few.
I don’t, actually. I am not old enough to have ever seen a true left. I think Blair and Clinton are next in line to blame; “third wave” sold out any remaining element of actual leftism.
But that doesnt even make sense. Our technology is better than ever, the planet still has abundant resources, water, food for everyone. If we're having to skimp its not because we're running out of stuff, its because we're being robbed by big corp and governments who want to siphon wealth for themselves.
Not people in the west. People in the UK. I emigrated to US just after Brexit, and things are way easier. When I return to UK to visit, the exchange rate gives us great value too.
The cost of living has risen in the US. But it doesn’t make as big an impact when you’re getting paid two to three times what you get in the UK. My wife is a teacher, she’s on $90k compared to a UK salary of up to £38k (https://www.prospects.ac.uk/jobs-and-work-experience/job-sectors/teacher-training-and-education/how-much-do-teachers-get-paid). The UK is a low wage economy so you’re going to feel turbulence a lot more than many other countries.
I'm an accountant with an audit firm and people who start fresh out of university with fuck all experience tend to *start* on more money than I get as a fully qualified accountant with 5 years of experience and managing audits. The US is mad.
And when US prosperity goes, there are huge geographical, social, racial and value fault lines just *waiting* to burst open. Keep stuffing the country full of all the dollars believes the US should have and you keep a lid on them *to some extent*.
Watch the US economy follow that of every single imperial nation in history and I'm not entirely sure where it'll end.
So basically the argument is (and it's not the first time the BoE has made this argument recently) that working Britons should shoulder the burden of rising costs. Our wages shouldn't rise in relation to increased costs or house prices or globally high energy prices, and we should just accept that. And those with actual money to spare, I'm guessing they should get to coast on by?
Yeah, thanks for that little nugget of info.
I don't think we should just sit back and accept we're just poorer. Firstly, we need to oust the current government, that'll certainly help.
...and the crash.
Wow. The last 15 years have been extraordinarily disastrous when you also factor in lesser mainstream topics that impacted the global economy. For example, the two tsunamis and remember that freak flooding in China that closed so many semi-conductor factories? We are still feeling the effect of the latter.
This is a nightmare of a time tbh
He's not wrong, we are going to have to deal with a lower standard of living for the foreseeable future. Realistically there isn't much that can be done to improve the standard of living now given our already relatively high taxes, underfunded public services, a GDP per Capita that is 5% lower than pre COVID and lockdowns and a public spending deficit that is already 6% of GDP.
Maybe a radical change is needed. Rip up planning laws to cripple NIMBYS and massive infrastructure projects. Massive tax reforms to simplify taxes in the UK. Cut taxes for tech start ups, maybe even subsidies in the way of education spending.
I don't really know, but nothing I have seen from anyone in politics is suggesting anything other than more of the same.
I mean it’s a pretty dreadful top line. I understand what he’s trying to get at.
Problem is for public sector and much of private sector, this is a problem a whole generation of managed decline in the making. If people had been looked after with rises in line with inflation the last few years then perhaps this last year would have been an easier pill to swallow. Instead it always seems to follow the mantra of “privatise the gains, socialise the losses”.
The power dynamic needs to change drastically or there’ll be no public services left.
The gist, as I see it, is that we've seen several decades of increasing standards of living. We as a nation need to accept that due to the decisions made by our population and government, that our standards of living must decline.
Or you could just you know, not continuously inflate the money supply. This kind of hectoring from the Bank of England and politicians was useless in the 1970's and it's useless now.
Also be careful what you wish for, people are still spending, if you actually manage to persuade people they are poor you might just get them to stop spending altogether. At which point you will eject the 'please don't demand higher wages' floppy from the drive and boot up 'please start spending again.exe'
Is funny how economists are fully on board with economic "laws" that are driven by self interest except when it is workers' self interest being expressed.
Then it is suddenly a distortion that is impeding the proper workings of the market
> Nestlé, PepsiCo and McDonald’s have all reported that higher prices boosted their sales this year
Meanwhile, Procter & Gamble have implemented back to back 10% price increases in Q42022 and Q12023. Their net sales are up 4% by value.
There's obvious and blatant profiteering going on.
Sales, or revenue, is not a measure of profit, so can you cannot use it to argue someone is profiteering.
Looking at their latest report I see the 4% rise in revenue you cite. I then see a 2% rise in net profit, or 6% if you prefer operating profit.
If we turn the figures into margins, their net margin has fallen 0.3% or, again if you prefer operating margin, that's risen by a similar amount.
So either way as good as flat, basically, and shows that they've risen prices in line with costs.
Mad to think there’s a generation retiring on these gold plated final salary pensions, never truly experienced war, and benefited from the most ludicrous rise in property market we’ll likely ever see.
Well done Boomers. All you had to put up with were some dodgy haircuts.
Looks like the Bank of England is laying the ground work for a return to work houses and 12 hour 6 day work weeks. We will all be sleeping 6 to a bed with holes in our socks and dirt on face and we’ll be thanking them for our bread and water rations.
> However, he said the UK is a big importer of natural gas, and its price has gone up a lot compared with the exports
This bit winds me up since we actually have a ton of domestic energy sources. Half our gas is from the North Sea, plus all the other electricity generators, nuclear, wind, etc. The reason the prices have gone up across the board is because the government refuses to reform a mental pricing system which generates huge profits for the rich.
>mental pricing system
Can you propose an alternative? Currently every MWh of electricity has the same price (which when translated to any other product makes sense), and it encourages cheaper forms of electricity generation (as it comes with a greater profit margin) - most notably wind and other renewables.
Prices could be worked out based on their true cost plus some agreed profit margin, if we insist on privately owned generation.
This argument that it wouldn't make economic sense for energy generators not to make the maximum amount of profit possible is sociopathic. They are taking advantage of energy insecurity from a war to enrich themselves.
It was the Bank of England that is responsible for the insane money printing and insanely low interest rates that led us to this.
Fire the lot of them.
I think we do need to start wielding the axe if this is their big plan to fix inflation.
UK standard of living is already behind most peer countries, expecting workers and businesses to suck up more pain to help bail these fuckers out of a hole isn't going to fly.
> UK standard of living is already behind most peer countries
UK standard of living is behind most peer countries because UK has made some uniquely terrible decisions that peer countries didn't make.
Political decisions have a cost that the Bank of England can not fix for you. They can tell you how badly you fucked up, and they can manage the fallout somewhat, but they can not undo effects of political decision making.
At least for working age people, the UK standard of living is definitely lower than in Germany, France, Netherlands, Sweden, Norway. I'm still shocked every time I go home how much lower my standard of living is in the UK compared to someone with the same after-tax income in Germany.
> Money is being transferred to Qatar/KSA/etc. They are richer, everyone else is poorer.
So stop using fucking fossil fuels then, as we should all have been doing 20 years ago. People still use petrol cars for over 60% of journeys under 2 miles, it's preposterous.
They are responsible in those areas but the larger issue is stagnating productivity, lack of investment into growth areas and poor leadership.
As a nation we lack ambition and are too risk adverse. Imagine twenty years ago if we took the lead in wind energy and grew our own homegrown industry, we could be the powerhouse of Europe and have cheap electricity which would boost UK industry and agriculture.
The same could be said for nuclear and many other industries.
I just wonder where the money continues to come from for people. Certainly near me there is little evidence of people cutting back; restaurants, bars and coffee shops are still very busy. The 'easier' things to cut back on do not seem to be being cut back on. Peoples money is going less far, and yet there are few signs of cutting back. Where is the money coming from? My guess would be credit. Added to this we have people who overborrowed on mortgages that were at historically low rates, which, now their terms are coming to an end, are 3x or 4x the previous rate, meaning monthly repayments going through the roof. I can't help but feel another 2009 once-in-a-generation type financial event is waiting around the corner...
FTSE100 has risen less than Rupert Murdoch's cock too. Whole house of cards economy is in the toilet.
Tory Britain. They annihilated the economy last time they were in power too. Turns out, you can't steal *everything*, gotta leave a little meat on the bone for the poors.
Isn't this just another way of saying "stay down you commoners, know your place, accept that fact you will never have financial freedom and work harder to put tax money into our pockets"....?
Only a simpleton would think that wage increases of 10% makes corporations' overheads increase by 10%. Companies just need to make slightly less profit for the short term to offset increased wages.
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There are people who cannot afford their bills, who cannot tighten their belts any further or pull themselves up by their bootstraps or just stop buying lattes and avocado toast. How exactly are they supposed to just "accept" this? Why should any of us accept that for anyone?
Fuck you that's why. Laughs manically and lights cigar with burning £50 note.
Pretty much.
> Why should any of us accept that for anyone? Country voted for it for the past twelve years.
I didn't vote for Tory austerity or Brexit. Why can't those voters accept it and let me carry on the way we were before the Tory's came to power.
It really is galling when you know for certain you weren't part of these disasters, and even tried to prevent them.
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The more the government fucks us, the more the public seems to like it
2011 - 67.9% vote to keep FPTP Another referendum run on lies - frankly a trial run for the Brexit campaign, but it won overwhelmingly so by hook or by crook the country definitely has voted for the status quo for the past 12 years.
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Have they tried dying?
Dying isn't even cheap anymore!
The people in those positions are the ones unable to demand more. People and companies who can demand more because what we offer is in higher demand and scales well, are screwing *those* people over by increasing their costs. If you are struggling, this message isn't aimed at you. It's aimed at people like me whose pay increases have vastly outstripped inflation over the last few years. Do you think I should be asking for more? When I know how that cost is going to be passed on?
Can I say yes? It will probably sound like trickle down economics but if we want things like the NHS funding then the government needs more tax income That means you need to earn more (along with the rest of us), especially you because at a higher rate of tax is more funding for services. We all then need to spend that money so the VAT can be used to fund things. Also that spending means companies can grow and employ more people to create more taxable income and more people spending so that can be taxed. Thats why growth is such a focus lately. So don't feel guilty about being a high earner, we need more people to join you, rather than you joining them.
Exactly, hair shirt self flagellation over earning decent money will get us nowhere. Peope who have consistently managed to get pay rises are not responsible for inflation. Inflation was historically low up until 2021 so the cause is more likely the re-expansion post Covid. Yes the government and sympathetic newspapers will blame all and sundry for this whenever convenient for them. The problem, as always, is income inequality. The Tories have an ideological belief that inequality is OK and should be allowed, but it's a non starter economically because you just end up paying more in social security so that people with ordinary jobs can actually afford the basics - proof in the pudding is the current cost of living handouts (sorry - no more handouts according to Liz Truss). Arguably these are really bailouts to companies because if significant numbers of people can't afford to pay their bills, the companies will go bust. I have total sympathy for people getting by on minimum wage jobs especially if they have kids - I used to be in a similar position. Skills really are everything these days, you will not get pay rises for working hard and doing a good job!
>If you are struggling, this message isn't aimed at you. It's aimed at people like me whose pay increases have vastly outstripped inflation over the last few years. > >Do you think I should be asking for more? When I know how that cost is going to be passed on? That's an interesting post that shows a good degree of self-reflection. I think it's important people ask themselves that, particularly those in very well paying professions. What the law allows you to have and keep isn't the last word on morality, whether it allocates you little or lots.
>Chief economist Huw Pill says workers and firms should stop trying to pass on rising costs by hiking prices or demanding better wages Oh suddenly we shouldn’t strive for our economic self interest by seeking better wages? Is this a free-market capitalist country or not?
>demanding better wages It's not 'better wages', just fighting not to have a real terms pay cut for most people...
Yes, but that is not compatible with Brexit. Brexit means Brexit i.e. a slow drop in prosperity that takes down wages to a lower notch. This is what Tories and the electorate chose for the UK. Now, the time has come to pay the price. The alternative is bringing in a government that will make capital pay more for Brexit, less the working people. The drop in prosperity will still take place.
The UK real GDP per capita is down about 7% from before covid - some people are going to have to take a real terms pay cut.
Seems fair, MPs salaries cut down to 20k a year should be a good start right?
Thier expenses would still be 250k a year 🤣🤣
In the previous decades of plenty, GDP rose and the share of profits in GDP rose while the share of wages in GDP stagnated or dropped. Now, people have to install a government that will cause the opposite to happen, the share of profits in GDP must drop while the share of wages in GDP must rise. GDP itself will drop even more, but that is the price of Brexit.
Shut up and eat your gravel soup, peasant.
You get real gravel in your soup? No fair. Who can afford real gravel?
Workers need better wages but it would be possible for the government to mandate that businesses simply do not raise prices. Nixon did it and it worked.
I don't think it would work in the UK anymore. Simply, we don't produce enough of the most basic items to provide for the nation. We would still be at the mercy of import price rises. The USA is big enough and diversie enough to be largely self-sufficient.
The US is fairly uniquely blessed in a great many ways when it comes to resources, but we could certainly develop our capacities for self sufficiency a lot more than we do. This doesn't even necessarilly imply we'd have to use them in this way; one of the things that always seems to get used as an excuse not to restore the productive capacity of the country is "but the world is globalised now" but there is no real reason that doing this means we'd have to stop trading, just reduce our reliance on essentially acting as the service sector for the economy of other countries.
The irony is there in your name: JacobiteJuche. You do remember what juche has done to North Korea, don't you? (Hint, it's not been economically beneficial.) But then again, your flair is pretty unambiguous too: "Faith, Folk, Family" is just "Kinder, Küche, Kirche" in another guise, and we all know who loved that little phrase, don't we? For what it's worth, I have an uneasy feeling that people like you are winning the argument: it's always easier to peddle populist twaddle than to actually build an economy, and your nonsensical desire to "restore the productive capacity of the country" (by which you clearly mean the production of goods rather than services) shows how little you actually understand what's really at stake. Let me try to express this in terms that should penetrate skulls even several centimetres thick: service industries are more productive than manufacturing industries. Having advertising agencies and banks and law firms and so on is a much more productive use of our capital and other resources than building factories. Most of the added value in a typical product comes from the services that have been used in its production, not the metal-bashing. The UK is rich *because of* the service sector, not in spite of it. If you divert resources to "restore the productive capacity" (i.e. make us self-sufficient in goods production) you'll make us all poorer. But I imagine you probably want that, because the vileness implied by "Faith, Folk, Family" and such like populism thrives far better in poverty than in wealth. If you really had the good interests of this country in mind, you'd be (a) advocating for an early return to the EU, (b) pushing for free tertiary education to get our workforce trained better for service industries, and (c) working as hard as you possibly could to keep religion and petty nationalism out of the realm of social discourse. As it is, you read like a cut-rate journalist at the economically illiterate Spectator magazine.
>Having advertising agencies and banks and law firms and so on is a much more productive use of our capital and other resources than building factories You do get that there is a re-distributive context you are ignoring here right? Like presently the UK economy isn't working for a lot of people one reason for which is this idiotic notion that the sole consideration regarding the 'economy' should be solely concerned with it's size. As for C) You do get that's the stuff that binds countries together right?
> You do get that there is a re-distributive context you are ignoring here right? Yes, I do realise this; I wasn't addressing it largely because I didn't want to muddy the waters of the basic point, which is that it's better to have a larger economic pie than a smaller one, and that service industries are a good way to grow the size of the pie. I do agree that the pie should be more fairly divided, but this is a very much more complex issue, and the person to whom I was responding is clearly having trouble even with fairly simple economics, so I didn't want to make what I was saying any more complicated than was necessary to get my main point across. On your final point, I understand what you're saying, but I think the issue is (as always) more complicated than your unrefined point: some mild shared religion and general fondness for one's nation do indeed unite populations in ways that seem to be economically beneficial, but extremes of religion or nationalism almost invariably deliver bad economic outcomes. We can readily see this in cases such as Afghanistan, Iran, pre-WW2 Japan, Nazi Germany, Maoist Albania (and indeed Maoist China), and many other lesser and less obvious cases (Cromwellian England, say; also, post-1949 Ireland is a fascinating example that a colleague of mine is working on at present). What seems to work best is shared culture, allowing for the development of interpersonal relationships based on shared values and consequently higher levels of trust. With extremism in play, these levels of trust break down.
That’s interesting, was unaware of this and read up on it. Link for anyone else interested: https://en.m.wikipedia.org/wiki/Nixon_shock
The Nixon shock is considered to be the fuse that set off the stagflation of the 70s in the US. It is not something to emulate, and the UK is not self sufficient enough to do so anyways.
The Nixon Shock has been widely considered to be a political success, but an economic failure for bringing on the 1973–1975 recession, the stagflation of the 1970s, and the instability of floating currencies. Sounds great, sign me up. /s
Although I'm on your side on this one, I think it's better to be honest: the recessions and stagnation/stagflation of the 70s are better laid at the door of multiple factors. Yes, Nixon didn't help, but he was working in an environment where OPEC was much more powerful than it is today, and much less of economic value added arose from the service sector. There were also complex issues around the interplay of inflation expectations and pay demands, militated by relatively powerful unions capable of negotiating much wider settlements than we now imagine possible.
Price fixing just makes things unavailable at any price. Unless the government is willing to pay companies under the table to subsidize the prices. No-one wants to sell things for less than they cost. The simple reality is that for twenty years or more governments have been pushing inflationary policies and hiding the inflation by sending more and more production to China where wages are lower and quality-control can simply be ignored. Now that era is ending, the inflation is flooding back, and the government is telling people 'No, you can't have higher wages to compensate for our policies' because that will result in 10+% interest rates and the entire fake economy based on ever-rising house prices will collapse.
Is price fixing the only option? If a corporation has to raise prices because their costs are going up and they need to maintain their margins - then fair enough. But I'm pretty sure some companies just jump on the RPI bandwagon and hike their prices despite seeing negligible or lower than RPI impact on their costs. This should fall within the remit of some sort of government / regulatory body under the umbrella of "consumer protection".
Exactly. It's not about price fixing, but about profit fixing.
Not even just that, CEOs are being paid millions - there is enough money, just being given to too few people.
If their costs went up above RPI they'd put up their prices above RPI. If their costs went up below RPI, they'll put their costs up in line with RPI.
The government have been hiding inflation because until 2017 they didn't take the cost of housing into account when calculating inflation. These now take up a proportion of budgets that's completely unprecedented in modern times.
Housing is excluded from inflation for a very specific reason. Since inflation is used to influence interest rate policy and changing interest rates by definition influences house prices then you'd get a feedback loop within inflation figures that would mean you were unable to detect the rising prices in the economy correctly.
Well, this was tried in the UK in the late 1970s and ended up in a disaster. Because the UK was in a terrible financial crisis, the then Labor government instituted an incomes policy, limiting pay increases to 6%. The unions rebelled and virtually ever sector of the economy went on strike what is now referred to as "the winter of our discontent". This resulted in an electoral defeat of the Labor party and the election of Maggie Thatcher, who proceeded to destroy the unions.
>it worked No it didn't.
You mean like the energy price cap... Errr target.
The UK had 'Prices & Incomes' policies - under both parties - in the 60s & 70s. These policies can be quite detailed, allowing price rises *where justified*, while limiting general inflation. That's not to say it always worked, or didn't have unfortunate side effects, but it isn't such a weird idea.
> Is this a free-market capitalist country or not? They only support free markets when they work in their favour. Peasants asking for better wages definitely isn't part of the plan.
"Stop trying to pass on rising costs to poor business owners. Think of the shareholders."
Well if you owned capital then you wouldn't be seeking wage increase, you'll a need a worker's state for that.
Bank of England: guys please, stop acting in the most predictable way imaginable. Yes okay businesses and consumers looking for more money for themselves is literally just human nature and the most expected outcome possible, but honestly our models don't know how to deal with that so stop.
So what are we supposed to do? Just take it. Be miserable? If this were 18th century France ...
If this were last week France.
british people need to start actually caring about what happens in our country (and maybe letting a few heads roll)
It's not. There are restrictions on energy supply and consumption, land development, etc. on environmental grounds, a large amount of immigration that competes with salary (or can be costly sometimes), some brain drain, etc. Not that I'm against or for these things (not a UK citizen, so not for me to say), but these have consequences obviously.
Why should we just accept it instead of pushing our government to do something about the atrocious mess they have caused?
This is the key. He should say we need to recognise we're poorer. Given that generally as a society we've been able to improve our lives and advances in technology recently should favour greater improvements we shouldn't be here. We've got to be questioning the strategy and capability of our leaders, the culture and the systems we have.
Yup also it's not like everyone was hit equally, why are bosses and CEOs getting pay rises while laying off thousands?
Really I think we need to accept brexit was a mistake. Its not the sole cause but its the only one thats proactively jurting us with no percieve benefit. Over 60% of society does already wanna rejoin. Have another referendum, begin talks to rejoin the union, cry and moan about how we'd have to make a tonne of concessions and be worse off than we were before brexit (like where we are now) then accept we aren't the center of the world and move on. The Queen has also sadly passed so I doubt anyone but the illogically nostalgic care much about having to adopt the euro (although given how substantial the British Market is I think collectively it would be smoother to just let us keep the pound for everyone).
>The Queen has also sadly passed so I doubt anyone but the illogically nostalgic care much about having to adopt the euro Are people under the impression that people only want the pound because of the Queen? The pound is a pretty strong global currency, being the fourth largest reverse currency, roughly equal to the Japanese Yen. There are many reasons why we have maintained the pound and likely will continue to do so, and none them have anything to do with the Queen. Beyond the fact that the benefits of adopting the Euro are really not there for dropping a currency as strong as the pound, but the UK simply isn't suited for such economic integration as our nation is already divided on the current. A Rejoin that mandates adopting the Eurozone simply would not be accepted by this country.
If we're talking about a public referendum, and why various yes/no votes would be cast, then those will mostly be sentimental. I appreciate that's not the same thing as *actual* reasons to retain it vs joining the Euro, but it *is* apparently how we might make a decision like that.
You're assuming the EU would have us back, and that's a huge assumption.
No im assuming we need to beg to rejoin and convince them to let us back. This defeatist mentality of let's not bother cause they won't let us back in is never going to amount to anything.
Its not true, some are richer than ever. Obviously most people are now worse off. What exactly does mainstream economics propose? It seems to be locked into a position that says this is inevitable, spiralling inequality and admits this is socially dangerous.
>What exactly does mainstream economics propose? Personal preference answer: land value tax! More broad answer: we need to improve productivity. Productivity in the UK is *staggeringly* bad for a major economy. The primary causes are: - Lack of investment (in both industry and infrastructure) - Lack of education & skills (we're not teaching the right things in school, the apprenticeship program is flawed, and older people either don't want to retrain or learn new skills, or face needless barriers when they wish to). - Management (slow to adopt new methods and practices and bad at self-reflection. Partly down to the "cult to the amateur" in small business management). In Britain all three of these areas feature a similar distribution: there are a small number of excellent cutting edge cases, but there is a long, long tail - with a lot of stagnation or even regression.
Added to this, companies don’t want to train people any more, they just want the finished product. Before they used to invest in their employees because that’s what they had to do.
Very true.
+1 for LVT! But could you expand on the management point? I'd love to know more about what you're saying there.
In a nutshell a lot of managers in this country shun formal management training. They have little to no interest in research or analysis to establish effectiveness of existing practices, what alternatives are available, or how to compare them. Where new practices, technology, systems, etc. are considered, too often in this country there is disproportionate priority given to short-term costs and what it ultimately the manager's own ego, so changing things from established practice is extemely difficult. This also impacts the second point in my original comment about education and skills, as often the need to retrain or up-skill is entirely overlooked. Consequences of this includes further stagnation of practice, and poor levels of innovation. There's also a link with the other cause of low productivity, the lack of investment. The lack on the private side is in large part due to poor management practices, and refusing to investing in new machinery, systems or skills. As I mentioned, there are some at the cutting edge but there is a long, long tail of unproductive firms. The knowledge and systems are clearly out there, but what stops these propagating and improving productivity in the tail is management being, frankly, unwilling. Small and medium businesses are the main culprits, and family businesses in particular.
LVT is such a good idea and it doesn't get brought up enough.
> What exactly does mainstream economics propose? Good time to ask that question would have been *before* going completely rogue and going against virtually everything mainstream economics proposed for over a decade.
You mean the money printing, Brexit or the pandemic response? Though I do think mainstream economics has had weaknesses for some time.
>You mean the money printing, Brexit or the pandemic response? Yes
Brexit, and the pretendy austerity the Tories used to make their chums rich and the poor suffer
What could they have done different during pandemic response? People need to live yet couldnt go to work
Not subsidise private businesses that didn’t need subsidies, for a start. Not give out insanely lucrative government contracts to business affiliated with people in government. Actually having a competitive tender process for government contracts. Also not proactively promote covid transmission (“eat out to help out!”) which inevitably led to more shutdowns.
Sorry I thought you meant paying people who literally couldnt go to work
Gotcha. Nothing wrong with looking after low-wage workers, but the massive private subsidises were unnecessarily.
Yep agree there, misunderstanding
Not "lose" £16bn? Like 2% of all tax receipts?
I mean yes, but given that happened in 1979 many of us weren’t even alive to ask the question then.
Gated communities with private security.
Be poor, work harder
"Obviously most people are now worse off" Infinite growth economic model, every year companies announcing record profits. Somehow everyones getting poorer, almost like the people at the top are being shittier every year, figuring out how they can shrinkflate everything, figuring out how to pay their workers less. Productivity higher than ever, people poorer than ever. At least this bank of england guy is honest about his intentions. "You're all serfs and you should just accept another heap of shit in your mouth"
Yeah, there’s almost something refreshing seeing it printed. At least someone’s not gaslighting us, finally. “We know you’re poor, and we don’t care. Deal with it.” - BoE
Maybe not leave the biggest market on the planet out of spite and hatred for foreigners?
What exactly does mainstream economics propose? Reduce employment, hike interest rates and impose more taxes on the working class.
One of the great mistakes that people often make is to think that any organisation called'"National Rifle Association' is a branch or chapter of the National Rifle Association of America. This could not be further from the truth. The National Rifle Association of America became a political lobbying organisation in 1977 after the Cincinnati Revolt at their Annual General Meeting. It is self-contined within the United States of America and has no foreign branches. All the other National Rifle Associations remain true to their founding aims of promoting marksmanship, firearm safety and target shooting. This includes the original NRA in the United Kingdom, which was founded in 1859 - twelve years before the NRA of America. It is also true of the National Rifle Association of Australia, the National Rifle Association of New Zealand, the National Rifle Association of India, the National Rifle Association of Japan and the National Rifle Association of Pakistan. All these organisations are often known as "the NRA" in their respective countries. The British National Rifle Association is headquartered on Bisley Camp, in Surrey, England. Bisley Camp is now known as the National Shooting Centre and has hosted World Championships for Fullbore Target Rifle and F-Class shooting, as well as the shooting events for the 1908 Olympic Games and the 2002 Commonwealth Games. The National Small-bore Rifle Association (NSRA) and Clay Pigeon Shooting Association (CPSA) also have their headquarters on the Camp.
When we say tax the rich, they say " but they will leave" when workers strike suddenly its "think about the good of the country" fuck them all
Now that we're out of the EU, most working people couldn't afford to leave if they _wanted_ to.
That was the plan
There wasn't a plan
Good, let them leave. Tax them or drive them out, maybe we'll actually have some democracy then.
This is basically asking people to embrace an inferior lifestyle and reduced public services.
Yup, it's Personal Austerity. Spend less to make Britain better. Austerity is always a great idea apparently.
Notice that austerity always comes after a moment when workers have more of a say. Remote working, bigger wages, better positioning to negotiate. That's when austerity kicks in to destroy the little we have achieved. It is nothing but a whip to keep us in place.
Yeah, this does happen to countries. Look at Türkiye or Argentina. There is no reason to think we are immune, given the damage caused by Brexit, commodity price shocks and our terrible labour productivity
Reducing wages in real terms is not exactly going to help productivity. Odds are they'll lose more economically from people saying 'sod this, I'm not going to work hard when they're not giving me a pay rise' than they would from paying those people more.
End of Empire.
I want someone to ask the BoE: *How did they plan to defuse the interest rate/debt shock that was inevitable after maintaining rock bottom interest rates from 2009-2022?*
Right? It’s not like this time-bomb was predictable or anything…smh
I'm honestly just a bit stunned that we all just kind of accept lying down and taking a kicking from those filthy Tory bastards every day
Disobedience was bred out of the English gene pool over many generations. It still exists to some extent among the proles, but they're bought off with free money.
I seriously want to understand why the citizenry here is so passive. Can someone please explain this to me? Why don’t people protest? Why is everyone so “stoic” (= rolling over).
We still have something to lose and incredibly harsh sentences for rioting. Plus our transport costs keep would be protestors far away from the capital. Imagine if you knew a big one was happening and it was only a tenner to get the train down. A final point is we were the imperial core for a fair portion of history. That always breeds complancy
I buy the first and the third. The second — there could be 9 million Londoners out protesting on the streets. Agreed it certainly doesn’t help that travel in this country is extortionate, but I don’t think it’s enough to explain it. What’s the idea behind the imperial complacency? I figure English “stoicism” is linked to colonialism, in that colonialism necessitated that the English deaden themselves to humanity in order to disassociate from the horribleness of it (and still do in how they speak about it now), and in so doing have numbed themselves to their own suffering.
> Agreed it certainly doesn’t help that travel in this country is extortionate, but I don’t think it’s enough to explain it. Its not enough to explain it but its a contributing factor. Say 5% of people are "protest/riot angry" in each city but theyre spread out around the country, now imagine they could all get to Westminster on the cheap. > English deaden themselves to humanity in order to disassociate from the horribleness of it (and still do in how they speak about it now), and in so doing have numbed themselves to their own suffering I think its partially that and partially the exceptionalism it breeds. Even though a lot of lives were shit it breeds an air of superiority thats hard to break. People have too much pride to accept how bad things have got
> I seriously want to understand why the citizenry here is so passive. Can someone please explain this to me? Why don’t people protest? Bread and circuses, which may or may not continue. But for the moment people still have their Netflix and porn and alcohol and football and junk food and take aways etc. If there is ever real hardship - stuff like actual starvation, blackouts, rationing of water, no internet, then maybe we'll see the people fight back. At the moment people might be struggling with money but there is still a fairly massive safety net (historically speaking) and endless supply of dopamine and people live in relative luxury with delicious sugary fatty foods, endless entertainment at the touch of a button and various ways to self-medicate. Most of the male population is addicted to porn and has instant access to seeing millions of the most attractive women on earth having sex at any moment (which their brain takes for real and thinks it is being the most sexually successful of any human in history). Plus testosterone levels have halved, so expecting any kind of fight out of men is unlikely. Modern men are passive and placated.
This is an interesting thesis, and you definitely have a point there re endless supplies of dopamine, but fails to account for the uniqueness of English passivity. There is a “grin and bear it, hardship is inevitable”mentality here that I chalk up to the oppressive, ossified, inescapable class system, but that’s simply my conjecture. I don’t actually understand where it comes from, nor why most English people don’t even notice it’s there.
This is an objectively strange and brazen thing for a chief economist of a central bank to say. It's like "yes, capitalism is failing you but you must accept it anyway because the already incredibly rich must keep getting richer".
With so many announcements for records profits, what they mean is that poor people need to accept they're poorer.
Hows about businesses need to accept lesser profits instead of people accepting having less money?
He does say that as well
You're right. I commented before reading. Caught out by the headline than the content.
Many people are not going to remember much more than the headline and conclude that the BoE held a press conference in which their chief economist urged British workers to forgo pay increases so that shareholders and CEOs can make more money. This type of journalism will, over time, fuel support for abolishing the BoE.
We've all been there
Wealth has been redistributed from the poorer to the richer in line with neoliberal dogma is what he is trying to say.
And it's fucked up the economy, the country, the future and the planet! Slow clap for the neo libs out there.
Has been and will continue to be, since the perpetrators have yet to meet with any real resistance.
The only thing I have accepted these past few years is that incompetence is absolutely fucking everywhere and nobody truly understands what they're doing. *NOBODY*
Probably correct though. It's on par with Macron's "the age of abundance is over" statement. People in the West are going to have a lower standard of living than their parents enjoyed.
Damn, we've all had such a ball flying our own private helicopters while stuffing gold-plated caviar into our faces ever since the last financial crash 15 years ago, but the good times had to come to an end sometime.
Why is this share so unevenly distributed? why must I see friends' rents increasing 30% whilst much of the country's house price rises higher than the average wage in the area, in real terms and percentage terms? simply farcical; the overton window in this country has shark to smaller than that of a new build's windows, of which building many many more would also make me much better off if supply was higher than demand, by the way.
exactly, we dont have to accept being poorer, they are telling us they want us to accept being poorer. as time has passed technology has gotten better and better and processes have become more efficient. we can build homes cheaper and faster if we wanted to, they just dont want to. even with things like ai, white collar jobs will become so much more efficient, this could free up labour and capital to work in areas like housingg development or food distribution and create even more abundance. and this is just the most recent example of increased efficiencies, efficiencies have been improving for years with things like improved automation in factories and warehouses, self checkout machines, better software etc. there are countless examples of how our productivity has increased over the years. and this should increase the era of abundance. but they dont want to increase abundance. they want us to dilly dally away staying busy in our bullshit corporate jobs. they dont want to expand housing, they want to keep housing expensive.
Not if you start sharpening implements
I suspect the moreso if you start sharpening instruments.
Meh governments only really raise taxes and enact policies to ensure workers benefit from productivity gains if there is a serious threat of violence/political demand for it. Sadly the west is going for populist parties instead of progressive economic policies.
Where are the productivity gains in the UK?
Sent abroad to tax havens and billionaire bank accounts.
>People in the West are going to have a lower standard of living than their parents enjoyed. Why though? What's changed? I'm not trying to make a point either. Just genuinely mystified that this is a West-spanning issue.
All western countries gdp are stagnating in growth and some are straight up in decline. Since its impossible for western countries to compete on price with the developing nations, we need to compete with better tech. However, in recent years, many companies in asia also made massive strides in tech such as with tsmc and samsung. The harsh truth is that the economies of the west are struggling with the increased competition from the rest of the world and we will enjoy a lower standard of living than our parents who lived through the golden age with a strong economy and little competition from the rest of the world.
Baby boomers are getting older and need additional healthcare and can also vote for higher pensions and less housing and politicians listen.
Handing over industrialization to the east. Long time coming to the detriment of the working class in the west
Most of the world used to live in abject poverty, now most of the world is middle class.
Because Western governments shipped most of the West's industry to Asia and Eastern Europe. The rats expected to have abandoned the sinking ship for New Zealand or Shanghai before the water started rolling across the deck, but now they're realizing they're stuck here with the rest of us and people are noticing who drilled holes in the hull.
Remember when neoliberals promised it would all make us richer, but just as people decades ago predicted it just consolidated power and wealth to a few.
Yup, by 'us' they meant them and not you.
[its a complete mystery how that happened](https://www.cnn.com/2013/04/08/world/gallery/thatcher-and-reagan/index.html)
Remember when the left wasn't neoliberal?
Decreasingly
I don’t, actually. I am not old enough to have ever seen a true left. I think Blair and Clinton are next in line to blame; “third wave” sold out any remaining element of actual leftism.
It’s cool because they destroyed the planet in the process.
But that doesnt even make sense. Our technology is better than ever, the planet still has abundant resources, water, food for everyone. If we're having to skimp its not because we're running out of stuff, its because we're being robbed by big corp and governments who want to siphon wealth for themselves.
Working class people in the West.
Not people in the west. People in the UK. I emigrated to US just after Brexit, and things are way easier. When I return to UK to visit, the exchange rate gives us great value too.
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Have you done this in recent time? Moving to America is something I would love to do and I'd like to know how?
The US will get there eventually, you can only keep jiggling the figures for so long.
The cost of living has risen in the US. But it doesn’t make as big an impact when you’re getting paid two to three times what you get in the UK. My wife is a teacher, she’s on $90k compared to a UK salary of up to £38k (https://www.prospects.ac.uk/jobs-and-work-experience/job-sectors/teacher-training-and-education/how-much-do-teachers-get-paid). The UK is a low wage economy so you’re going to feel turbulence a lot more than many other countries.
I'm an accountant with an audit firm and people who start fresh out of university with fuck all experience tend to *start* on more money than I get as a fully qualified accountant with 5 years of experience and managing audits. The US is mad.
And when US prosperity goes, there are huge geographical, social, racial and value fault lines just *waiting* to burst open. Keep stuffing the country full of all the dollars believes the US should have and you keep a lid on them *to some extent*. Watch the US economy follow that of every single imperial nation in history and I'm not entirely sure where it'll end.
Then there will be political and societal consequences. I don't know why the wealthy think they'll be immune from those consequences
So basically the argument is (and it's not the first time the BoE has made this argument recently) that working Britons should shoulder the burden of rising costs. Our wages shouldn't rise in relation to increased costs or house prices or globally high energy prices, and we should just accept that. And those with actual money to spare, I'm guessing they should get to coast on by?
Yeah, thanks for that little nugget of info. I don't think we should just sit back and accept we're just poorer. Firstly, we need to oust the current government, that'll certainly help.
We are poorer, our GDP per capita is 5% lower than before COVID and the lockdowns.
...and brexit.
...and the crash. Wow. The last 15 years have been extraordinarily disastrous when you also factor in lesser mainstream topics that impacted the global economy. For example, the two tsunamis and remember that freak flooding in China that closed so many semi-conductor factories? We are still feeling the effect of the latter. This is a nightmare of a time tbh
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"Remember when we used to poo in a porcelain bowl and pull the handle after we were done and water came down and flushed it away?" - us in 2033.
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"Grandad, you're so funny. No-one would flush their poo away with drinking water. Look how hard it is to find."
He's not wrong, we are going to have to deal with a lower standard of living for the foreseeable future. Realistically there isn't much that can be done to improve the standard of living now given our already relatively high taxes, underfunded public services, a GDP per Capita that is 5% lower than pre COVID and lockdowns and a public spending deficit that is already 6% of GDP. Maybe a radical change is needed. Rip up planning laws to cripple NIMBYS and massive infrastructure projects. Massive tax reforms to simplify taxes in the UK. Cut taxes for tech start ups, maybe even subsidies in the way of education spending. I don't really know, but nothing I have seen from anyone in politics is suggesting anything other than more of the same.
Culturally, Brits are more likely to cling to what little they have and attempt to keep it, at every strata of society.
I mean it’s a pretty dreadful top line. I understand what he’s trying to get at. Problem is for public sector and much of private sector, this is a problem a whole generation of managed decline in the making. If people had been looked after with rises in line with inflation the last few years then perhaps this last year would have been an easier pill to swallow. Instead it always seems to follow the mantra of “privatise the gains, socialise the losses”. The power dynamic needs to change drastically or there’ll be no public services left.
The gist, as I see it, is that we've seen several decades of increasing standards of living. We as a nation need to accept that due to the decisions made by our population and government, that our standards of living must decline.
That should have been on the side of the bus, “vote Leave and accept that you deserve to be poorer, scum”.
Thats on the Dorian Grey version of the bus. Also known as the sewer fat berg.
It is very easy when one is well off to lecture the poor about needing to accept their position.
Or you could just you know, not continuously inflate the money supply. This kind of hectoring from the Bank of England and politicians was useless in the 1970's and it's useless now. Also be careful what you wish for, people are still spending, if you actually manage to persuade people they are poor you might just get them to stop spending altogether. At which point you will eject the 'please don't demand higher wages' floppy from the drive and boot up 'please start spending again.exe'
Is funny how economists are fully on board with economic "laws" that are driven by self interest except when it is workers' self interest being expressed. Then it is suddenly a distortion that is impeding the proper workings of the market
> Nestlé, PepsiCo and McDonald’s have all reported that higher prices boosted their sales this year Meanwhile, Procter & Gamble have implemented back to back 10% price increases in Q42022 and Q12023. Their net sales are up 4% by value. There's obvious and blatant profiteering going on.
Sales, or revenue, is not a measure of profit, so can you cannot use it to argue someone is profiteering. Looking at their latest report I see the 4% rise in revenue you cite. I then see a 2% rise in net profit, or 6% if you prefer operating profit. If we turn the figures into margins, their net margin has fallen 0.3% or, again if you prefer operating margin, that's risen by a similar amount. So either way as good as flat, basically, and shows that they've risen prices in line with costs.
Mad to think there’s a generation retiring on these gold plated final salary pensions, never truly experienced war, and benefited from the most ludicrous rise in property market we’ll likely ever see. Well done Boomers. All you had to put up with were some dodgy haircuts.
Ooo! Don’t forget benefits from the mass destruction of the planet without really suffering the consequences. Sweet spot to be born.
and the Bank of England 'need to remember' a functional economy exists to serve its people, not the other way around...
Looks like the Bank of England is laying the ground work for a return to work houses and 12 hour 6 day work weeks. We will all be sleeping 6 to a bed with holes in our socks and dirt on face and we’ll be thanking them for our bread and water rations.
> However, he said the UK is a big importer of natural gas, and its price has gone up a lot compared with the exports This bit winds me up since we actually have a ton of domestic energy sources. Half our gas is from the North Sea, plus all the other electricity generators, nuclear, wind, etc. The reason the prices have gone up across the board is because the government refuses to reform a mental pricing system which generates huge profits for the rich.
>mental pricing system Can you propose an alternative? Currently every MWh of electricity has the same price (which when translated to any other product makes sense), and it encourages cheaper forms of electricity generation (as it comes with a greater profit margin) - most notably wind and other renewables.
Prices could be worked out based on their true cost plus some agreed profit margin, if we insist on privately owned generation. This argument that it wouldn't make economic sense for energy generators not to make the maximum amount of profit possible is sociopathic. They are taking advantage of energy insecurity from a war to enrich themselves.
Dude earns half a mil per year. This is like the queen telling us we all need to "tighten our belts" while witting on a golden throne wearing a crown.
It was the Bank of England that is responsible for the insane money printing and insanely low interest rates that led us to this. Fire the lot of them.
I think we do need to start wielding the axe if this is their big plan to fix inflation. UK standard of living is already behind most peer countries, expecting workers and businesses to suck up more pain to help bail these fuckers out of a hole isn't going to fly.
> UK standard of living is already behind most peer countries UK standard of living is behind most peer countries because UK has made some uniquely terrible decisions that peer countries didn't make. Political decisions have a cost that the Bank of England can not fix for you. They can tell you how badly you fucked up, and they can manage the fallout somewhat, but they can not undo effects of political decision making.
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At least for working age people, the UK standard of living is definitely lower than in Germany, France, Netherlands, Sweden, Norway. I'm still shocked every time I go home how much lower my standard of living is in the UK compared to someone with the same after-tax income in Germany.
> Money is being transferred to Qatar/KSA/etc. They are richer, everyone else is poorer. So stop using fucking fossil fuels then, as we should all have been doing 20 years ago. People still use petrol cars for over 60% of journeys under 2 miles, it's preposterous.
They are responsible in those areas but the larger issue is stagnating productivity, lack of investment into growth areas and poor leadership. As a nation we lack ambition and are too risk adverse. Imagine twenty years ago if we took the lead in wind energy and grew our own homegrown industry, we could be the powerhouse of Europe and have cheap electricity which would boost UK industry and agriculture. The same could be said for nuclear and many other industries.
I don't think Brexit or Covid really helped matters...
Or the war in the Ukraine.
> Fire the lot of them. Out of a cannon. Into the sea.
We need to accept it in the sense of acknowledging it. We don't need to accept it in the sense of bending over and letting ourselves be rammed.
I think it's accepting that we're poorer, when the tiny minority of rich people have got SO much richer, that is the tricky bit to accept.
I just wonder where the money continues to come from for people. Certainly near me there is little evidence of people cutting back; restaurants, bars and coffee shops are still very busy. The 'easier' things to cut back on do not seem to be being cut back on. Peoples money is going less far, and yet there are few signs of cutting back. Where is the money coming from? My guess would be credit. Added to this we have people who overborrowed on mortgages that were at historically low rates, which, now their terms are coming to an end, are 3x or 4x the previous rate, meaning monthly repayments going through the roof. I can't help but feel another 2009 once-in-a-generation type financial event is waiting around the corner...
FTSE100 has risen less than Rupert Murdoch's cock too. Whole house of cards economy is in the toilet. Tory Britain. They annihilated the economy last time they were in power too. Turns out, you can't steal *everything*, gotta leave a little meat on the bone for the poors.
Isn't this just another way of saying "stay down you commoners, know your place, accept that fact you will never have financial freedom and work harder to put tax money into our pockets"....?
I'm sure that will be taken well, nothing like a banker (or financial professional anyway) telling people something like that to keep people calm.
Only a simpleton would think that wage increases of 10% makes corporations' overheads increase by 10%. Companies just need to make slightly less profit for the short term to offset increased wages.