The ‘lag’, ‘trailing leg’ or ‘long wake’ of any economic measure means that its effects are often felt long after the problem it was supposed to solve has disappeared. 2010’s ‘balancing the books within the space of one parliament’ (that went well, didn’t it?), austerity to you and me, is one example. Hiking interest rates to quell inflation is another and we should remember from the last time, the early ‘80s, that this was tried in anger that, yes, inflation reduced but only at the cost of much human misery. Then the pendulum swung to the era of loadsamoney, and so was followed by more redundancy and repossession misery as we headed into the 90’s. Are we learning the lessons of history? I don’t think so.
“The true impact of inflation on cash savings and pensions”
Leaving your money in the bank or building society has always meant that its ‘real value’ after inflation will go down. Although rates go up to, supposedly, control inflation, any chart you look at will show that, apart from a few very short-term blips (N Lamont, I’m looking at you) they are never more than inflation.
