What a difference eight months make. At the Conservative party conference in October, the prime minister announced his plan for a high-wage economy. Last week, against a backdrop of rail strikes and thousands of unionised workers marching in London, he called for wage restraint. This placid-sounding term belies reality: wage restraint would mean workers accepting sharply falling pay given rocketing prices.
In the short term, inflation – most of which is caused by the rising prices of imported goods such as energy, food, metal and other commodities – poses a real cost to the UK economy that can’t be wished away. If firms expect prices to keep rising, this could become a self-reinforcing cycle. But it is the wealthiest who should be shouldering this cost. Meanwhile the government needs to get to work on unhooking our economy from fossil fuels and building resilient supply chains that would prevent inflationary episodes like this in the longer term.
