This is a summary of the posted article (I’m a bot).
Inflation held steady at 8.7 percent in May despite analyst expectations it would fall to 8.4 percent. It makes it almost certain the Bank of England will increase interest rates to 5 percent in August. The country’s economy now risks a wave of mortgage defaults as a slew of fixed rate deals head for expiry in the second half of this year. The data is likely to unnerve Prime Minister Rishi Sunak, who pledged in January he would slash inflation in half if he came to power.
There is a lot of news around the world about high inflation, and it is necessarily true that inflation arises from demand exceeding supply across entire economies. Central banks often speak in terms of needing to raise interest to “cool demand”. But there is little discussion of the relationship between demand and standard-of-living. It seems to be implicit that the demand-balance is temporarily upset and we must only delay some gratifications - never shrink the economy!
But what if that is the exact situation - that overconsumption is not just a temporary imbalance to adjust but a pathological trait that must be eradicated. I think we have barely begun the journey to sustainability. An interest rate of 5% will prove to be weak soup. Remember these good old days when the full weight of The Change had not yet been experienced.
