INFLATIONARY pressures and higher interest rates are right now at the forefront of the minds of many – apparently even those currently enjoying success against the most challenging of backdrops in the UK.

Vertu Motors flagged uncertainties around the impact of inflation and higher borrowing costs on households last week, as it reported strong trading.

The car retail group, which owns Macklin Motors in Scotland, declared: “The board remains optimistic for the future. New vehicle supply continues to improve whilst constraints in used vehicle supply in the UK are likely to persist, helping to underpin used vehicle values and gross profit.”

This is all very positive for Vertu.

That said, the group appeared keen not to take anything for granted.

It observed: “The market outlook, however, remains unclear due to uncertainty of consumer demand in the light of the impact of inflationary pressures and higher interest rates.”

Such considerations look likely to become ever more important across the economy as households face up to the reality of much higher interest rates and with the UK’s annual consumer prices index inflation rate in May, at 8.7%, the highest among the Group of Seven leading industrialised nations.

Robert Forrester, chief executive officer of Vertu Motors, made it plain he was "pleased to report that trading remains positive”.

However, Vertu’s note of caution on the economic backdrop was interesting.

For many, the effects of the surge in interest rates and the UK’s inflation woe are much more direct and immediate.

Sadly, this has not prompted the UK Government to react with adequate support for households under pressure from high energy prices, an incredible jump in the cost of food, and the leap in interest rates.

The Bank of England has raised UK base rates from a record low of 0.1% in December 2021 to 5%, and economists and financial markets expect benchmark borrowing costs to go higher still.

Looking further ahead, the absence of policies from the Conservatives which might stimulate UK growth and mitigate the inevitably huge cost of Brexit is worrying but not in the least surprising. In this context, we should remember Chancellor Jeremy Hunt was a senior member of the David Cameron and George Osborne administration which kicked off the Tories’ savage austerity programme in 2010.

When Mr Hunt unveiled “new support measures for mortgage holders” on June 23, he declared: “Tackling high inflation is the Prime Minister and my number one priority. We are absolutely committed to supporting the Bank of England to do what it takes.”

He went on to reiterate the “do what it takes”, in line with a familiar pattern from some politicians in these days of populism of not just uttering but repeating empty soundbites, adding: “We won’t flinch in our resolve.”

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Mr Hunt did not mention the Tories had fuelled the UK’s inflation woes with their hard Brexit. Nor did he touch upon the likelihood that inflation will fall anyway given base-year effects, and that this will be nothing to do with the UK Government.

As my column in The Herald on Friday observed, it was difficult indeed to disagree with Liberal Democrat Treasury spokesperson Sarah Olney’s description of Mr Hunt’s package on mortgages as a “sticking plaster for a gushing wound”.

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It is not the first time, of course, that the UK Government has failed to put in place adequate support. And made a big noise about the support that is far from adequate, as if it were just what was required.

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We saw this with the UK Government’s support for households and businesses on energy prices. This did amount to greater actual help than the measures on mortgages, which crucially steer clear of direct financial assistance, instead focusing on the likes of potential moves by people to interest-only mortgages and delaying repossessions for only a relatively short while. However, millions of households have been struggling with eye-watering household energy bills and many will continue to be weighed down by the cumulative effect of the fuel bills burden even as electricity and gas prices ease, while remaining high by historical standards.

The tone from the Conservatives, who seem more than happy to bear down on growth and risk pushing up unemployment as they refuse to “flinch” on tackling the inflation problem that they have fuelled, signals the electorate at large will have to continue to pay for the UK’s economic mess.

People should not hold out any hope of relief coming their way from those in charge, at a time when the UK Government should be focusing on what could be done to mitigate a dismal and admittedly complex situation as the surge in interest rates heaps mortgage misery on millions.

Mr Hunt said on June 23: “We know that getting rid of high inflation from our economy is the only way that we can ultimately relieve pressure on family finances and on businesses.”

There are other ways too, of course.

In the immediate future, we are surely going to be hearing a lot more about the real-world impact of the UK’s cost of living crisis and crucially the surge in interest rates, both in terms of the grim effect on households and the direct and indirect impacts on businesses across a raft of sectors.

Longer term, it remains difficult to see anything from the Conservatives that might boost growth in post-Brexit Britain, and the headwinds are strong.

We are about as far away as we could be from the bright picture of the future painted by the ruling Conservatives when Boris Johnson was in charge and Rishi Sunak was Chancellor. This state of affairs should be no surprise to anyone with a basic grasp of economics.