What does the new year have in store for consumers — and families trying to make ends meet? A stumbling recovery at best, with a continuing tide of inflation that I predict will swiftly pass the Bank of England’s current forecast of ‘around 6 per cent by spring 2022’ and take much longer to turn than the Bank’s Cnut-like posturing seeks to suggest. And driving that surge will be the energy price spike, which could be the factor — far more potent than endemic sleaze and proven incompetence — that topples the Johnson regime.
Fact: wholesale natural gas prices have quadrupled in the past year. They may drop again in the medium term when the global interplay of demand, supply and geopolitical tension returns to something like its status quo ante; or they may not. In the meantime, barring alternative energy miracles, something has to give.
Either the supply industry, strapped by its regulatory price-cap, goes bust en masse (28 out of its 70 companies having already done so) and has to be nationalised, passing the excess costs to taxpayers. Or the price-cap rises in April from its current level of £1,277 per standard household to £2,000 or more, hitting the poorest alongside continuing rises in grocery bills. Or the government comes up with a bodged bundle of VAT cuts, targeted subsidies and relief funding for suppliers that satisfies few, plays particularly badly with Red Wall voters and offends already rebellious free-marketeer Tory backbenchers. If you can see a way for the Prime Minister to bluster through this one, you’re wiser than I am.
Hard life on the land
At a sheep farm high on the moors on New Year’s Day, I glimpsed how tough that life really is — and how much tougher it could become in 2022. Even the smallest farmer will lose income as the government scales back subsidies and moves away from EU-style cash-per-hectare handouts towards the principle of ‘public money for public goods’ in the form of incentives for nurturing healthier soil.