Were I the UK’s governing party, I would choose not to have my central bank raise interest rates, predict double-digit inflation and warn of a recession halfway through polling day. But such are the joys of Bank of England operational independence.
There are of course no good slide shows. Instagram ‘photo dumps’ are a particular bugbear of mine. But the Bank’s Monetary Policy Report makes for depressing reading.
It expects inflation to hit 10 per cent this year (for context, it has a target of 2 per cent so this is higher) and warns of a recession by the end of the year as the energy price cap jumps a possible 40 per cent in October, following April’s 54 per cent increase.
All this means you are almost certainly getting poorer. Household disposable income is set to fall this year by the second largest amount since records began in 1964.
Despite all this, brace yourself for further interest rate rises. Three of the nine-strong Monetary Policy Committee voted to raise rates, not by 0.25 per cent but 0.5 per cent.
Central bank governors aren’t around to make friends and inducing a recession to get a grip on inflation is nothing new. So it is what comes next that is truly disconcerting for our long-term prosperity.
Not only that the Bank predicts unemployment will rise from 3.8 per cent today to 5.5 per cent by 2025. In the weird world of monetary policy, this is potentially helpful, in that a looser labour market could help to reduce wage rises and thereby curb inflation. (I should clarify that unemployment, particularly of the long-term variety, is a personal tragedy with large human and social costs.)
But worse, that growth going forward is likely to be anaemic at best, and more to the point the UK economy is possibly incapable of supporting anything better. That even historically unremarkable levels of growth - say 2 per cent - is not achievable without generating unacceptably high levels of inflation.
That is both a large economic and political problem whose impact will last far longer than politicians’ lines to take following today’s local elections.
In the comment pages, Defence Editor Robert Fox warns that Vladimir Putin is under pressure to declare some sort of success by the Victory Day Parade on May 9, and so a fresh mobilisation may be imminent.
Meanwhile, Nick Bowes, chief executive for the Centre for London, says Crossrail will change how we think about the capital and that he, for one, is giddy with excitement.
And finally, today is Cinco de Mayo, so how better to celebrate than with tacos, tostadas and beyond. Here’s Clare Finney’s take on the best Mexican restaurants and bars in London.
