{"id":660,"date":"2025-07-31T06:54:21","date_gmt":"2025-07-31T06:54:21","guid":{"rendered":"https:\/\/davecarrera.com\/?p=660"},"modified":"2025-07-31T06:54:21","modified_gmt":"2025-07-31T06:54:21","slug":"is-the-uk-government-driving-our-inflation","status":"publish","type":"post","link":"https:\/\/davecarrera.com\/index.php\/2025\/07\/31\/is-the-uk-government-driving-our-inflation\/","title":{"rendered":"Is the UK Government Driving Our Inflation?"},"content":{"rendered":"\n

Why rising prices may be more political than they admit<\/strong><\/em><\/p>\n\n\n\n

When politicians talk about inflation, they often speak as if it\u2019s a storm that rolled in from the Atlantic \u2014 an external force beyond their control.<\/p>\n\n\n\n

But the uncomfortable truth? Much of the UK\u2019s inflation problem is made in Westminster.<\/strong><\/p>\n\n\n\n

\n\n\n\n

1. Spending More Than We Earn<\/strong><\/h3>\n\n\n\n

For years, successive governments have borrowed heavily<\/strong> to fund everything from pandemic bailouts to energy subsidies.<\/p>\n\n\n\n

When a state spends far more than it earns, it doesn\u2019t just add debt \u2014 it floods the economy with money<\/strong>. And when too much money chases too few goods, prices rise.<\/p>\n\n\n\n

Inflation 101.<\/p>\n\n\n\n

\n\n\n\n

2. Tax Freezes & Stealth Rises<\/strong><\/h3>\n\n\n\n

The Treasury\u2019s threshold freezes<\/strong> \u2014 pulling millions of workers into higher tax bands \u2014 don\u2019t sound inflationary at first.<\/p>\n\n\n\n

But what do they cause? Wage demands.<\/strong><\/p>\n\n\n\n

People squeezed by stealth taxes push for higher pay. Employers raise prices to meet wage costs. And the cycle tightens its grip.<\/p>\n\n\n\n

\n\n\n\n

3. Subsidies That Prolong the Pain<\/strong><\/h3>\n\n\n\n

Take the Energy Price Guarantee<\/strong>. It stopped bills from exploding \u2014 which was welcome \u2014 but it also blunted the incentive to cut energy use<\/strong>.<\/p>\n\n\n\n

Demand stayed artificially high, and prices stayed stubbornly sticky.<\/p>\n\n\n\n

Short-term relief. Long-term inflation.<\/p>\n\n\n\n

\n\n\n\n

4. The Cheap Money Hangover<\/strong><\/h3>\n\n\n\n

We like to say the Bank of England is independent<\/strong>, but its policies aren\u2019t made in a vacuum.<\/p>\n\n\n\n

For over a decade, the government enjoyed the spoils of ultra\u2011cheap borrowing<\/strong> underwritten by the Bank\u2019s quantitative easing<\/strong>.<\/p>\n\n\n\n

That era of printed money and low rates? It didn\u2019t just keep the economy alive \u2014 it sowed the seeds of today\u2019s cost\u2011of\u2011living crisis<\/strong>.<\/p>\n\n\n\n

\n\n\n\n

5. Trade & Regulation Choices<\/strong><\/h3>\n\n\n\n

Add to this the Brexit effect<\/strong> \u2014 higher costs at borders, new friction for imports, and regulatory tinkering in housing, energy, and farming.<\/p>\n\n\n\n

Every added layer of complexity? Another nudge upward on prices.<\/strong><\/p>\n\n\n\n

\n\n\n\n

So, Who\u2019s to Blame?<\/strong><\/h3>\n\n\n\n

The truth is uncomfortable.<\/p>\n\n\n\n

\n

Inflation isn\u2019t just global. It isn\u2019t just the Bank of England\u2019s problem. It\u2019s political.<\/strong><\/p>\n<\/blockquote>\n\n\n\n

Successive governments created the conditions<\/strong> for rising prices \u2014 with cheap borrowing, stealth taxation, market\u2011distorting subsidies, and regulatory friction.<\/p>\n\n\n\n

\n\n\n\n

Final Thought<\/strong><\/h3>\n\n\n\n

When politicians talk about inflation like it\u2019s a force of nature, remember:<\/p>\n\n\n\n

\n

It\u2019s a man\u2011made storm.<\/strong><\/p>\n<\/blockquote>\n\n\n\n

And the forecast will only change when the people making the weather do.<\/p>\n\n\n\n

\n\n\n\n

Hope isn’t what they promise you.
It’s how you carry on when they don\u2019t deliver.<\/strong><\/em>
\u2014 Dave Carrera<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

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