Statutory caps were brought in under Heath, this time the government wants a voluntary store scheme to meet Sunak’s pledge to halve inflation
Graham Watson's insight:
Larry Elliott seeks to draw out both the similarities and the differences between the price controls of the Heath government in the 1970s, and the attempt by the Sunak government to encourage supermarkets to reach a voluntary agreement to do the same in the present climate.
Of course, a voluntary rather than statutory cap is clearly very different but many of the same problems still remain, not least the distortionary effect on the allocation of resources and the associated welfare loss.
The Bank of England has so far failed to return the annual rate to its 2% target – so what are the options?
Graham Watson's insight:
Whither inflation - and in this article whither inflation policy - this article looks at a number of measures that the Bank of England and government might take, including wage and price controls.
However, it stops short of considering altering the inflation target. You might ask why it is that we have a 2% inflation target, and whether a 2.5% or 3% target might be more appropriate.
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Larry Elliott seeks to draw out both the similarities and the differences between the price controls of the Heath government in the 1970s, and the attempt by the Sunak government to encourage supermarkets to reach a voluntary agreement to do the same in the present climate.
Of course, a voluntary rather than statutory cap is clearly very different but many of the same problems still remain, not least the distortionary effect on the allocation of resources and the associated welfare loss.