Living costs - where the real threat lies
Fraser Nelson 6:27pm
Déjà-lu is a feeling that Spectator subscribers become
familiar with. Part of the reason for subscribing (which you can now do from £12, including free iPad access) is to get ahead of the
competition - and read today what the newspapers will be saying tomorrow. We’re delighted that the cover story of Thursday’s edition, by Allister Heath, is the main OpEd slot in the
Daily Mail today - and with good
reason. All of the focus has been on the cuts, 500,000 jobs to go etc. As CoffeeHousers know, jobs are not expected to be the issue over the next few years: the same forecasts suggest 1.5m jobs will be created. (This 3-1 ratio may sound optimistic, but it is what
happened under Major.)
Heath points to what will cause the coalition problems: the soaring cost of living. He has uncovered the ‘misery index’ which shows that low wages, smaller hours and RPI inflation of 4.8 percent have combined to make the cost of living higher than any point since 1982. Osborne et al will, of course, be oblivious to this - they’re sucked into the weird world of the IFS decile charts and are worrying how best to manipulate them. They’re looking in one area, where the real story is happening in another: the Average Joe is bearing an extraordinary burden, getting heavier at a rate undetected by any official economic metric.
Osborne doesn’t quite realise, I suspect, that his proposed VAT increase in January will be compounding this misery. Perhaps more importantly, he’ll end up being blamed for rising prices. Britain has the highest inflation in Western Europe right now (Ireland is in deflation). As Heath says, prosperity - real or illusory - was the Teflon coating which protected New Labour. Folk felt rich, their house was going up, their living room was full of stuff bought on credit. Now, folk feel poorer, their house price is falling and the world is becoming tougher by the day. Under such conditions, people tend to blame the government. It’s a new trend - but ask any shopper. The average orange is a third more expensive than last year. Salmon is up by 25 percent, butter by 22 percent. These tiny sums - rather than the billions in the deficit forecast - is what might destabilise Osborne.
Morten Morland illustrated this beautifully for us on this week’s cover: a guy worried about the axe coming down on his wee toe, when the real threat is coming from behind him. I think we’ll be hearing more about this theme in coming weeks and months.
PS - You can buy the current edition for £3.20 in the shops,£2 direct, £4.99/month on iPad (free to subscribers) or join our subscribers from just £1/week. Click here for further information.
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Hugh
October 23rd, 2010 6:37pm Report this commentMilton Friedman had it right then, if you abuse the money supply (QE) then 18 months to so later you get inflation to compensate - all other things being equal. MPC note please.
alexsandr
October 23rd, 2010 6:40pm Report this commentSurely people will shun the overprices crap they have been buying up to now. They will park a little distance away for free rather than pay for parking, they will buy own brand stuff rather than established brands. This will help kill some of the inflation off.
Bill Kristol-Balls
October 23rd, 2010 6:52pm Report this commentAverage Joe doesn't tend to eat Salmon but I take your point.
This makes getting the income tax starting threshold up to £10,000 a top priority.
Gotta love the Lib Dems!
Verity
October 23rd, 2010 6:55pm Report this commentDéja lu. I didn't know Fraser had it in him.
Philip
October 23rd, 2010 6:56pm Report this commentToo right. The focus has ignored how we feel.
Low interest rates are now essential to keep the feel good for many mortgage holders.
Low inflation is also required.
Doubt that will happen.
DAVID VINTER
October 23rd, 2010 7:45pm Report this commentFood inflation is the most impotant, you can put off next years holday--- but food?
Much more difficult!
oldtimer
October 23rd, 2010 7:50pm Report this commentThe inflationary impact of QE is compounded by the effect of the explicit green taxes as well as the extra charges included in our electricity bills.
According to Charles Moore (in The Daily Telegraph today) this amounts to £6 billion this year. By 2020 he says it will amount to £16 billion - equivalent to 4pence on the basic rate of income tax today.
If the politicians think we have not noticed, then they should think again. No doubt they hope that inflation will take care of the national debt - after all debasing the currency by clipping the coinage or printing more of it has a long history. But there will be a political price to pay.
Rhoda Klapp
October 23rd, 2010 8:03pm Report this commentDidn't Rhoda post just this idea in a comment yesterday? Feel free to follow my lead any time.
wrinkled weasel
October 23rd, 2010 8:06pm Report this commentAny dork can understand that the cost of living has gone up.
Beer and fags is a human right. And so is driving to work. And being warm and having a ready supply of chicken nuggets in the freezer. And X boxes.
Unless you are a member of a shouty, greedy Trade Union, the future is definately not Orange.
Tiberius
October 23rd, 2010 10:18pm Report this commentTime was when ladies used to be marked out by their modesty. Then came the Coffee House blog.
Barry Bilge
October 23rd, 2010 10:31pm Report this commentPerhaps this would be a handy time to axe the impending rises to energy bills. A mine laid by Miliband the Younger that will cost households hundreds of pounds more per year.
Dimoto
October 23rd, 2010 11:42pm Report this commentDepends who you listen to; poor old Liam Halligan over at the Telegraph, has been arguing this for about two years, to general derision from the ignorantati.
Looney Toons Adam Posen is dying to give us yet more QE (the problem is looming deflation don't cha know!)
We should give thanks for Andrew Sentance, holding the line.
Verity
October 24th, 2010 2:24am Report this commentI'm getting a sense of déja vu from all this déja vu ...
Clear Memories
October 24th, 2010 8:27am Report this commentSo lets all practice the response:-
"It's all Gordons fault. And Ed told him to do it."
Stick to that and there will be no (political) problem.
Every Coalition member who the Biased Bollox Corp. allows near a microphone should parrot this message out before answering any question Dimbledork, Humpback or Paxo tries to stick them with (although, frankly, I think there is a strong case for the Coalition refusing to interact with the lying, twisting, distorting bastards full stop and leave them to explain why nobody from the Government will appear on the BBC)
Rhoda Klapp
October 24th, 2010 8:32am Report this commentTiberius, touche. Of course this was obviousology when I wrote it, I was just hinting that it became bloggable here not becuase of my limited wisdom, but because it was endorsed by...the Daily Mail. But I will extend it. You are not badly off if you turn out to be a few hudred worse off from 'cuts' or tax changes. You are in the recession if you lose your job. If you do not lose your job, you are watching the recession. You are in fact as one might say, a spectator.
justathought
October 24th, 2010 10:12am Report this commentI have attempted to subscribe and can find no option for a PDF edition. As someone who is always traveling away from home this would be the only sensible option, besides which I prefer to read from my laptop. It is an option that is commonly available for most publications, even from Mr Murdock's empire !
I wrote to the editor and asked was there any plans to have an electronic copy but am awaiting a reply.
On the topic of inflation I find that small items have risen but am more concerned about the deflation on my home and shares!
lescam
October 24th, 2010 1:23pm Report this comment@Clear Memories
" I think there is a strong case for the Coalition refusing to interact with the lying, twisting, distorting bastards [BBC]full stop and leave them to explain why nobody from the Government will appear on the BBC"
Well said. It would be especially awkward for the BBC if members of the Government, in addition to boycotting the BBC, were very happy to appear on Sky, ITV, Channel 4 etc. Let the Beeb try and explain that away.
In the run-up to the leaders' debates on TV last April, we were telephoned by the BBC asking if we were interested in attending the debate to be held here in Manchester. We said yes, and they then asked our political views. When we said Tory, they suddenly lost interest, saying they already had sufficient Tories (2 or 3?) in the prospective audience already, and were looking for "minority views". Like Labour perhaps?
Alex R
October 24th, 2010 1:25pm Report this commentFraser,
I used to subscribe, but decided not to renew because the magazine never reached me until Saturday or sometimes even Monday. On line access is no substitute (I want to read it on the tube).
Why can't you partner with the FT distribution network (at least in London) which guarantees to have the magazine delivered by 6am? I think The Times offers a similar service.
TGF UKIP
October 24th, 2010 2:41pm Report this commentTiberius, miaow!
Verity
October 24th, 2010 3:35pm Report this commentTiberius ... I'll bet you're a nifty dresser! Do you know many women?
maddy1
October 25th, 2010 6:09am Report this commentFood inflation! What a great job Tesco have done over the years. Now there are Tesco Supermarkets throughout the free world, why not pay Tesco a compliment? For a pound you can still buy soap and toothpaste and a toothbrush and even a small bite to eat and something to drink perhaps?
antidote
October 26th, 2010 3:11am Report this commentGold, property, oil, All real wealth comes out of the ground and cannot be printed. Look at the mess that Mr teleprompter-reader-in-chief has made on behalf of the 'federal' reserve over the pond!
Will Hicks
October 26th, 2010 9:36am Report this commentFraser. Nooooooooooooooo. You can't say in the media that house prices are falling. Don't you know they always go up ?!! Well, they do until all the media & MP sc um have sold all of their property "portfolios". Now please continue the scam until then Fraser old boy. Toot toot.
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