The reliance on Bank of England rate rises alone can’t go on. In other countries, rent caps and excess profit taxes are working
The government seems to be claiming that it’s winning the fight against inflation. But we are not out of the woods yet. Inflation currently is still far too high and the Bank of England has today increased rates again to 5.25% and lowered its growth forecast. But it doesn’t have to be like this. The case of Spain is a great counter-example. Its inflation has just fallen to the 2% target. How is it that it has already achieved this important milestone?
The reason is more forceful management of the economy – the Spanish government took quicker, more concerted action than ours did. Spain capped energy prices by more than the UK, lowered the cost of public transport, taxed excess profits and put in place limits on how much landlords can raise rents. While also coming with costs, this kept inflation from spreading more widely and more persistently than elsewhere.
Carsten Jung is a senior economist at the Institute for Public Policy Research’s Centre for Economic Justice
