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How the fuck do we pay it back


King Penda

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Lightly Toasted

Paywalled FT article republished by HL. The good news is that cash handouts translate to lower inflation. All of us on here who've been worried they'll have the opposite effect, are misinformed and can now relax:

 

https://www.hl.co.uk/news/2022/5/27/sunak-statement-helps-reduce-inflation-but-risks-higher-rate-rises

Sunak statement helps reduce inflation but risks higher rate rises

In his brief statement to the House of Commons on the UK’s cost of living crisis, Rishi Sunak managed to alleviate two economic problems, but at the cost of aggravating a third.

The good news is that his actions are likely to lower the peak rate of inflation this year and will help UK households deal with immediate cost of living problems. But they will also deliver the hottest of inflationary potatoes straight into the lap of the Bank of England.

The chancellor also left hanging huge questions over what will happen to support for households next year.

The first effect of the measures is likely to be mechanical, reducing the expected increase in inflation, and potentially avoiding the dreaded rise above 10 per cent this autumn.

If household energy bills rise to roughly £2,400 a year on average rather than the £2,800 level Ofgem this week said was likely, inflation is not likely to rise as high as previously expected.

This is not certain because the Office for National Statistics has not announced whether it will classify the support as a rebate, which would limit the rise in inflation, or as support for income, which would have no impact on the measured inflation rate.

Although this difference is mostly semantic — since a rebate and income support both make households better off to the same extent — most economists think the ONS will rule that the package will lower the rate of inflation...

:wanker:

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Wight Flight
10 minutes ago, Lightly Toasted said:

Paywalled FT article republished by HL. The good news is that cash handouts translate to lower inflation. All of us on here who've been worried they'll have the opposite effect, are misinformed and can now relax:

 

https://www.hl.co.uk/news/2022/5/27/sunak-statement-helps-reduce-inflation-but-risks-higher-rate-rises

Sunak statement helps reduce inflation but risks higher rate rises

In his brief statement to the House of Commons on the UK’s cost of living crisis, Rishi Sunak managed to alleviate two economic problems, but at the cost of aggravating a third.

The good news is that his actions are likely to lower the peak rate of inflation this year and will help UK households deal with immediate cost of living problems. But they will also deliver the hottest of inflationary potatoes straight into the lap of the Bank of England.

The chancellor also left hanging huge questions over what will happen to support for households next year.

The first effect of the measures is likely to be mechanical, reducing the expected increase in inflation, and potentially avoiding the dreaded rise above 10 per cent this autumn.

If household energy bills rise to roughly £2,400 a year on average rather than the £2,800 level Ofgem this week said was likely, inflation is not likely to rise as high as previously expected.

This is not certain because the Office for National Statistics has not announced whether it will classify the support as a rebate, which would limit the rise in inflation, or as support for income, which would have no impact on the measured inflation rate.

Although this difference is mostly semantic — since a rebate and income support both make households better off to the same extent — most economists think the ONS will rule that the package will lower the rate of inflation...

:wanker:

Clever. A small handout reduces inflation and therefore the increase in benefits.

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Yadda yadda yadda
17 hours ago, Wight Flight said:

Clever. A small handout reduces inflation and therefore the increase in benefits.

I doubt this accounting trick reduces the official inflation rate sufficiently to remove £15 billion in benefits uplift. Especially as there will be an inflationary impact from more money being spent in the economy.

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