Why rising prices may be more political than they admit
When politicians talk about inflation, they often speak as if it’s a storm that rolled in from the Atlantic — an external force beyond their control.
But the uncomfortable truth? Much of the UK’s inflation problem is made in Westminster.
1. Spending More Than We Earn
For years, successive governments have borrowed heavily to fund everything from pandemic bailouts to energy subsidies.
When a state spends far more than it earns, it doesn’t just add debt — it floods the economy with money. And when too much money chases too few goods, prices rise.
Inflation 101.
2. Tax Freezes & Stealth Rises
The Treasury’s threshold freezes — pulling millions of workers into higher tax bands — don’t sound inflationary at first.
But what do they cause? Wage demands.
People squeezed by stealth taxes push for higher pay. Employers raise prices to meet wage costs. And the cycle tightens its grip.
3. Subsidies That Prolong the Pain
Take the Energy Price Guarantee. It stopped bills from exploding — which was welcome — but it also blunted the incentive to cut energy use.
Demand stayed artificially high, and prices stayed stubbornly sticky.
Short-term relief. Long-term inflation.
4. The Cheap Money Hangover
We like to say the Bank of England is independent, but its policies aren’t made in a vacuum.
For over a decade, the government enjoyed the spoils of ultra‑cheap borrowing underwritten by the Bank’s quantitative easing.
That era of printed money and low rates? It didn’t just keep the economy alive — it sowed the seeds of today’s cost‑of‑living crisis.
5. Trade & Regulation Choices
Add to this the Brexit effect — higher costs at borders, new friction for imports, and regulatory tinkering in housing, energy, and farming.
Every added layer of complexity? Another nudge upward on prices.
So, Who’s to Blame?
The truth is uncomfortable.
Inflation isn’t just global. It isn’t just the Bank of England’s problem. It’s political.
Successive governments created the conditions for rising prices — with cheap borrowing, stealth taxation, market‑distorting subsidies, and regulatory friction.
Final Thought
When politicians talk about inflation like it’s a force of nature, remember:
It’s a man‑made storm.
And the forecast will only change when the people making the weather do.
Hope isn’t what they promise you.
It’s how you carry on when they don’t deliver.
— Dave Carrera
