It appears that Liz Truss has picked a card (any card). It was never going to be an ace, and it certainly isn't a queen, so will we Brits be content with the four of spades she has been brandishing around the photo calls and soundbite studios?
Her new Chancellor and NTI's favourite political alliteration, Kwasi Kwarteng is, it is suggested, close to announcing £150 billion in Government aid to cap energy bills at around £2,500 (they are capped at £1,850 currently, with big rises forecast for October and forever). It is said that this giant sum amounts to a cool £90 billion of gifts to us consumers and a further £60 billion to small and medium-sized businesses, who do not benefit from an energy cap.
This should take us until the next global pandemic or world financial crisis to repay, so close your kids' bank accounts now. They need to get used to the kind of poverty we are not going to be able to avoid.
The Federation of Small Businesses said that, without this assistance (and they put a shot across the 'reduce business rates bow', too, whilst they had the microphone), more than 65 per cent of small businesses would not make it through the winter. This is on top of the three-quarters of all pubs who will be calling time before February of next year.
What will all this mean for the poorest 75 per cent of the population (which is currently about 68 per cent of the population)? According to Andrew Bailey and his mates over at the Bank of England this intervention should have the effect of lowering measured inflation and helping households maintain their spending levels. However, it is also likely to force the central bank to raise rates faster to keep inflation under control. The number 0.75% for October was mentioned at the back of the room in which he was speaking.
Freezing energy bills would stop inflation rising far above the 10.1 per cent level it reached in July, but the Bank thinks the economy needs to go into recession to bring it down sustainably. They were then sent to a corner of the room to think about what they had just said.
Some people consider that co-ordination across monetary policy and fiscal policy will be almost impossible to achieve if the Government is seeking to boost spending while the Central Bank is trying to dampen demand.
The Office for National Statistics said on Monday (5 September) that, for the first time on record, there were more unfilled jobs in the economy than unemployed workers. But the jobs market has to cool to temper inflation. The Bank of England, who have been all over the numbers today, forecasts unemployment will rise by two-thirds to more than 6 per cent by 2025. The tight market will take time to unwind. It should take a tip from Ms Truss who, round about now, has kicked her shoes off and put up her feet with a cup of tea and a biscuit. Apparently, she thinks tomorrow will be another day which we in the NTI newsroom consider to be a tad optimistic.
