We’re in the midst of some tough financial times and the government is trying to balance a precarious situation. As the Treasury and the Bank of England battle stagflation — a period of stagnant growth and high inflation occurring at the same time — they each have their own responsibilities and agendas, but in order to really have an impact, they need to be working together.
This does not constitute advice and advice should be sought in all instances before acting on it.
Traditionally, the response to combat stagflation is for the central bank, in this case, The Bank of England, to raise rates to combat accelerating prices. While there has been an increase in rates, some economists predict that the BoE will need to raise rates even faster than originally predicted in response to the new government relief package in which every household is set to get at least a £400 discount on energy bills, with the poorest household getting a supplemental £650 to help with the increased cost of living expenses.
Will this payment remain a one-off? Or will they go the way that the furlough scheme went during the pandemic? It’s a reasonable question to ask given the fact that the pandemic lasted an extended period of time, and it is still ongoing — will the country require additional energy relief payments?
Many across the country are vocal about the stress they’re under in this economic climate as well as their desire for the government to support them in the same way they did after the coronavirus struck. It seems the people have now come to expect the level of support from the government during times of crisis, but whether or not they continue to deliver will remain to be seen.
They do only have themselves to blame, though, as one of the promises the prime minister touted in 2016 and 2019 during the push for Brexit was a state that provided more for their people.
This economic crisis certainly won’t be the last time the government will need to intervene in a way they never would have before the pandemic, so one would hope they’re prepared to meet the people’s expectations.