Right hands and right hands

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Insofar as the UK government can be said to have an economic strategy at all, it is one which depends on achieving a level of growth in the UK economy. But that growth is expected to somehow just appear, as if by magic, with no meaningful government action to bring it about. In the meantime, according to one former Bank of England official, the ‘independent’ Bank of England is obliged to force the UK economy into recession in order to hit its 2% inflation target. And who, exactly, sets the BoE’s target and demands that it meet said target? Well, that would be the same government whose forecasts on tax revenue and deficits assume that the economy will grow rather than shrink. They could, of course, change the BoE’s targets at any time. That would rather expose the fact that the idea that the BoE is in any meaningful sense ‘independent’ is more myth than reality, but leaving aside that entirely self-generated political problem there is nothing to stop the government relaxing the inflation target (whether in the long term or only temporarily) and replacing it with a target of achieving full employment. That would offend the Tory ideologues, of course, but it would benefit those citizens in difficulty in the here and now.

Worse, amongst the factors claimed to be driving inflation (other explanations are available) are a shortage of labour in some sectors (a more-or-less direct result of the ending of Freedom of Movement with EU countries), a privatised energy sector which has prioritised short term profit over longer term energy storage and security, the impact of Brexit and Covid on trade, and the war in Ukraine. Only two of those (Covid and the war) are not the direct result of ideology-based government policies, and both of those are exacerbated by a government declining to take mitigating action. In short, if we accept the theory of inflation being promulgated by one of those who has been very close to decision-making in the past, and whose views appear to be in line with Treasury thinking, we have a government which is deliberately following policies which lead to higher inflation, instructing the BoE to force the country into recession, if necessary, to control that inflation, and then basing its fiscal policies on the assumption not only that there will be no recession but that the economy will grow, all-the-while wringing its hands about the utterly but conveniently misnamed ‘cost of living crisis’. It’s not in fact a ‘cost-of-living’ crisis at all; it’s a full-blown economic crisis directly caused by government policy. It’s not so much that the left hand doesn’t know what the right hand is doing, as that having two right hands inevitably leads to some form of circular anatine aquatic motion (as the late Rhodri Morgan might almost have put it). At best.