With Liz Truss both coming and going today in the only race that is not taking place in Birmingham, we British people can be forgiven to consider our elbows to be arse-like. Maybe it is all a ploy to reduce national energy bills, but we are all getting so hot under our collars we might not need so much electricity and gas this winter.
We are cross about Centrica, the owner of British Gas, who reinstated its dividend at the end of last week, handing investors £59 million, after reporting operating profits of £1.3 billion during the first half of 2022. On Monday we fumed about Shell's record earnings of almost £10 billion for the three-month period from April to June, and today (Tuesday 2 August) and we have steam coming out of our ears having heard today that BP’s profits tripled to £6.9 billion in the three months to June, the highest in more than a decade, as it benefited from soaring oil, gas and fuel prices.
What on Earth are we going to do about the price of fish?
The next Prime Minister will have to abandon all their currrent wanton promises and adopt the correct policy mix when in office with their feet up. Commentators say this is tighter monetary policy to curb inflation, and targeted tax cuts to address weaker demand. There are gaps in Ms Cake-and-Eat-it Truss's policy promises, having withdrawn a couple today, considering them now to be ill-conceived. Rishi Sunak can see the bandwagon in the distance and is preparing himself to be hoisted upon it, now he realises that lower tax is, after all, the "right thing to do".
Anyone who reads anything other than Shoot! or Chit Chat magazine knows that current inflation rates are nothing to do with pouring hot money into a freezing economy during the pandemic. This inflation shock has been fed by misjudged monetary policy as we emerged from our homes last year and by factors on the supply side linked to the Covid, Brexit and war in Ukraine.
Thing is, we are used to cheap money and buying now - paying maybe, and higher prices and relatively lower incomes are a shock to the system. Not returning interest rates to a semblance of 'normal' after the global financial crash in 2008 has led financial markets to not price properly for risk. A misallocation of capital followed. Zombie firms stayed afloat. And all of this allowed the recent surge in inflation to take hold.
Central banks need to learn that warning us about crises once they are already upon us lends nothing but incredulity to an already disbelieving audience. Last year the Bank of England was wrong not to hike aggressively when inflation was low and the economy could have coped. Where can we expect them to be this time in 2024? No-one knows. No-one including our financial leaders.
