Two highly contentious issues on the economic and business front have commanded plenty of headlines in the last week or so.
As well as being controversial, the decisions around both are important, to put it mildly.
First up, we had Brexit thrust into the spotlight again by Labour leader Sir Keir Starmer. His comments came hard on the heels of former Conservative prime minister Theresa May having declared that her successor, Boris Johnson, had delivered a “bad” Brexit deal.
From the perspective of what might happen in the future, Sir Keir’s views are more interesting.
And sadly the Labour leader, for all his talk of trying to get a “much better” deal for the UK when the post-Brexit Trade and Cooperation Agreement with the European Union comes up for review in 2025, disappointed again with what he had to say.
He talked a fair bit about improving the post-Brexit situation but it was all within the context of the “make it work” mantra we have been hearing a lot from the Labour leader since his dramatic conversion to Brexit.
His talk around caring about “future generations” was, on the face of it, all very emotive.
However, the crucial point, in his interview with the Financial Times while attending a conference in Montreal a little more than a week ago, was that he once again ruled out rejoining the European single market.
READ MORE: Denial after denial from brass-necked Tory arch-Brexiter
He can talk all he likes. And, if he gets into power, we will see whether or not he can improve post-Brexit interactions with the EU at the margins, which is at the end of the day all that Labour is really talking about doing as it seems to continue to shy clear of upsetting Leave voters. Many of these voters must, of course, know by now that they were hoodwinked by the Conservative Brexiters and their empty promises. Admitting that they were duped is perhaps harder for them, but Sir Keir should have the courage to tell them that they were.
READ MORE: Ian McConnell: This humiliation for Brexiters is surely good for everyone else
Under Sir Keir’s current plans, if he were to win the general election all that could be hoped for is some tinkering at the margins. There might be benefits from this in some specific areas but it would not change the overall story of major damage to the UK economy and living standards over years and decades from losing frictionless trade with the EU and wider European Economic Area and the ending of free movement of people between the UK and EEA. Businesses and households, including future generations, would continue to pay the price for the Tory folly.
The other controversial and crucial issue which has again reared its head in the last week is the Bank of England’s hiking of UK interest rates.
The Bank’s Monetary Policy Committee ultimately pulled a surprise out of the hat by holding UK base rates at 5.25% at its September meeting, after a protracted series of increases.
It was a close call, with four MPC members voting unsuccessfully for the quarter-point rise that had been projected by economists. And the MPC left the door wide open to increasing rates further.
READ MORE: Ian McConnell: Rees-Mogg astounds as he tackles 'enemy of Brexit'
In a statement announcing the MPC’s decision, the Bank of England said: “Monetary policy will need to be sufficiently restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term, in line with the committee’s remit. Further tightening in monetary policy would be required if there were evidence of more persistent inflationary pressures.”
Ahead of the MPC meeting, a big deal seemed to be made in some places of annual UK consumer prices index inflation having unexpectedly fallen from 6.8% in July to 6.7% in August.
This is not really important at all though, in terms of pressure on household budgets. It means that prices are continuing to surge, with increases seen already baked in. And the easing of the annual rate of increase in consumer prices between July and August is absolutely tiny.
That is not in any way to take a hawkish line on interest rates.
Inflation was always going to fall sharply from its 41-year high of 11.1% in October last year because of base-year effects.
That situation has not changed, which is presumably why the Tories are making such a big noise about bringing down inflation. You would imagine this hullabaloo will be followed by them loudly claiming credit for overseeing a reduction in inflation when they have in fact fuelled it, in large part with the aforementioned hard Brexit delivered by Mr Johnson.
The far more important consideration when it comes to setting interest rates is whether we have yet seen the full effects of the eye-watering rises already implemented. It is impossible to imagine that we have done, given such rate rises take time to feed through to household finances, especially if people are fortunate enough to have a bit of a cushion. There is also the stark reality that many households have yet to see their good fixed-rate mortgage deals come to an end.
Another crucial point is that much of the inflation looks to have been coming from the supply side.
Pay has been driven higher to a significant extent because of skills and labour shortages, which are in turn in no small part down to Brexit. Back to that controversial and important topic again. And food prices and the cost of imports in general have also been fuelled by the impact of leaving the EU.
People are having to pay whatever essentials cost. Many are already struggling desperately with the price increases they are having to bear.
So it was a relief to see the MPC hang fire last week, given it is surely unwise to risk unnecessary unemployment and further damage to growth by overdoing rises in interest rates.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel