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Jerry Hayes

Through sheer carelessness Miliband has given a nod and a wink to wage inflation. Balls will be incandescent with rage.

February 28th, 2011 by Jerry Hayes

Politics is about impressions rather than reality. Some will think of David Cameron as an irresponsible youth getting tanked up with his upper class Bullingdon chums, raising hell at Number 10, trashing the dining room, nicking the silver, stealing the door Bobby’s helmet and ending the evening throwing tin cans at Larry the cat for white fivers. Others will regard Nick Clegg as a monied, gauche, opportunist, who has settled the fee for his soul with the devil, not for a mess of pottage, but just for a mess.

But how do we regard Ed Miliband? Now that’s a tricky one. We don’t. He is sort of there and then he’s not. He is almost the ectoplasm of labour past. As soon as we try and touch him, he is gone.  Blair was all charm, smoke and mirrors. Brown, a volcanic eruption of anger, frustration, whom like a Harry Potter Dementor, sucked the joy out of the essence of life. Some have compared Ed to Michael Foot. But that would be unfair. Michael was one of the most principled, decent, charismatic men I have ever met. And, with Enoch Powell, one of the finest orators of his generation. If the either of their names appeared on the Commons annunciator, bars and restaurants would empty and the chamber would fill to capacity. They could hold us spellbound.

Those who know Ed tell me he charming, witty and far less of a stuffed shirt than his brother David. Yet on screen he suffers from the disability of another charming and witty man; John Redwood. And what do they both have in Common? They look odd and awkward. In our mind’s eye, you could pop out for a beer with Kinnock, Cameron, Blair and Clegg. You could have a lazy, literary lunch with Footie. But where would you go and what would you chat about with Ed?  That is his first problem.

His second is that today he has probably made the worst decision of his political life. Politics is rarely defined by the grand statements of our leaders; rather the careless ones. Miliband probably thought that it was innocent enough to say that soon wages would be down to 2003 levels. UNITE would cheer and maybe Polly Toynbee would give him a paragraph or two. But he, inadvertantly, has just given the green light to a divided Bank of England to raise interest rates. I doubt whether he meant to, but he has raised from the 1970s dead the spectre of wage inflation.

The definitionof inflation is simple; too much money chasing too few goods. Raising interest rates is rather a blunt intrument to calm things down, but, by and large, it works. At the moment inflation by far outstrips the Bank of England targets. But it is not home grown. Oil prices, commodities and the price of food are rising. Some say that quantative easing is fueling the flames of inflation. That is simply wrong. QE was all about giving the markets confidence on a day that the banks didn’t trust each other to settle up. If it hadn’t happened, credit and debit cards would have crashed and there would have been riots in the streets. According to a close friend who is the chief economist of a major bank, one Friday afternoon we were minutes away from an economic Armageddon. Yet, little of the “printed money” has found its way into circulation. Most of it still resides in the Bank of England. So unless inflation becomes home grown raising interest rates would cause considerable pain and no gain.

What Miliband has done is give a nod and a wink to his chums in the Trade unions to demand higher wages. This is insanity. It harks back the the days of Wilson, Callaghan, the social Contract, the Social Compact, The Prices and Incomes Commission; the midwives of higher interest rates and the birth of economic catestrophe.

This fragile economy needs wage inflation as much as Cheryl Cole needs to marry a footballer. Higher interest rates would shatter any greenshoot that may be trying to pop it’s head through the astroturf. Through loose talk Miliband has opened an enormous goal through which George Osborne will kick goal after goal. Balls must be incandescent with rage.

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Comments [ 2 ]

  1. harry Benn harry Benn's Pig says:

    It just proves that like most things in life, the key element is time; the long term solution (interest rates rises)requires short term pain i.e. massive increases in the cost of servicing public debts (and that’s not going to happen).
    All investments/the economy are time critical, and politicans (of all colours) work purely on a 4/5 year cycle because it’s their own self interest/reelection that matters more to them than their often misguided principles.

    Time to start a “Love a Politican” campaign

    • Jerry Hayes Jerry Hayes says:

      Dead right. But there has always been a mechanism for “love a politician”, they are called brothels.

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