It is a failure of the Bank of England - this week's column from Radstock MP Jacob Rees Mogg

Jacob Rees Mogg MP writes:

High inflation is bad for individuals, households, and the economy. It destroys the value of hard-earned pay, deters investment and negatively impacts on households' cost of living.

The failure of the Bank of England, with its over printing of money and poor economic forecasting, has led to the excessive inflation that we are experiencing. The Governor, Andrew Bailey, has persistently underestimated the risk of inflation taking hold, has not moved quickly enough to take control of it and has failed to communicate with markets about his intentions. 

The Government is acutely aware of the knock-on effects and has tried to mitigate them. In December 2022, the Chancellor of the Exchequer met leaders of the United Kingdom's (UK) major mortgage lenders and the chairman of the Financial Conduct Authority to discuss how lenders will provide support.

All lenders have agreed that anyone worried about their mortgage repayments can contact them for help without any impact on their credit file and there will be assistance for customers who are up to date with payments to switch to a new mortgage deal at the end of their existing fixed rate deal without another affordability check.  

Lenders will also provide well-timed information to help borrowers plan should their current rate be about to end and offer tailored support for anyone struggling. This could mean extending their term to reduce payments, offering a change to interest only payments but also a range of other options like a temporary payment deferral or part interest-part repayment.

The Treasury recognises the impact of inflation on households' cost of living. It has taken action to protect the most vulnerable by announcing one of the largest support packages in Europe, totalling £94 billion. In 2022 and 2023, direct cash payments were made to more than eight million UK households on eligible means tested benefits, eight million pensioner households and six million people on eligible disability benefits. It has also helped local authorities such as BANES by extending the Household Support Fund, bringing total funding for this support to £2.5 billion.

The UK is not alone in dealing with high inflation. This is something that is occurring worldwide. However, in order to ease inflation quickly, the Government could instigate supply side measures such as deregulation as regulations put costs on businesses, which are then passed on to consumers. This should, as a fast and simple measure, galvanise the economy and take pressure off of people's financial situations.

Please do not hesitate to contact me:  www.jacobreesmogg.com / [email protected]