We now know that inflation is giving the Bank of England (BoE) the run around. The BoE has admitted it isn’t in control of the situation and has made significant errors based on gap-ridden evidence and models. It should have intervened sooner, and more aggressively. But it didn’t and now we’re left in the grip of higher inflation for longer, facing further rate rises and potentially a deliberately induced recession.
Although Britain appears to have the stickiest inflation of all (8.7 per cent versus 4.9 per cent in the US, an average of 7 per cent in the EU and just 2.9 per cent in Spain), it’s not alone in having challenging problems and hopelessly optimistic roadmaps for solving them.
Inflation is one of these issues. Achieving net zero goals is another. The two can be linked, some will argue, and because of that, there should be a pragmatic, new approach to both issues to maintain economic and political stability. Policymakers must surely be considering whether there is value in stretching the timescale for getting the inflation genie back in the bottle, and a change of tack on how to wean us off carbon-emitting lifestyles. Support for the latter could make some people more comfortable with the former.