Phew, business owners can breathe a sigh of relief – Rishi left CGT and its allowances alone, for the moment. So now discussion in the office has turned to inflation.
As a child of the 1970s/80s, many of my memories involve inflation. Prices always rising, Mrs. Thatcher banging on about killing it, and Germany being held up as model economy for its fiscal prudence. We were the sick man of Europe then, by 1990, we were a world leader and respected around the globe.
One of the key reasons, we were told, was that inflation was under control. So many oldies fear inflation – it is a byword for our weakness and poor international standing. Worse still are fears of the runaway hyperinflation that ravaged Germany and fostered the rise of the Nazi party.
But should we be spooked by inflation? For some, inflation provides opportunity. As the adage goes: “If you owe money, inflation is a very good thing. If people owe you money, inflation is a bad thing”.
Those from my parents’ generation bought houses for £3,000 and after 30 years could, if they had interest-only mortgages (none did), repay them with a personal cheque. For others – those without appreciating assets and fixed debt – it is problem: it reduces spending power, erodes the value of cash and, of course, is a driver of currency devaluation.
Last month I had a wee rant on the dangers of limited supplies of resources driving inflation, and these are now certainly feeding through. What is the benefit of giving nurses a 5% payrise if that is all stolen by inflation? Of course for the government, if inflation can outstrip the cost of debt service it can, like my parents, watch the real value of its colossal debt reduce.
So much like we have, as a nation, grown to accept high levels of Covid cases, maybe we will learn to live with a little bit of inflation. Keeping it to “just a little bit of inflation” might prove to be troublesome for our crowd-pleasing leaders – for historical context have a read of this.
You’ll find the usual selection of blogs from around the office linked below – do enjoy your November.
Last month I had a wee rant on the dangers of limited supplies of resources driving inflation, and these are now certainly feeding through. What is the benefit of giving nurses a 5% payrise if that is all stolen by inflation? Of course for the government, if inflation can outstrip the cost of debt service it can, like my parents, watch the real value of its colossal debt reduce.
