How inflationary will the latest helicopter money be?

[Flooble]

I see the "cost of living crisis" thread has taken a turn to discussing the inflationary aspects of the chancellor's latest announcements, however, I suspect some may not be looking at that thread any more since it's always at risk of turning into a "Grrr Tories vs Grrrr Labour" fight.

So, looking purely at the "technical" aspects, what is the likely knock on of Rishi's handout? The £650 payment to 8 million people in July is hardly going to be spent on heating (it's the middle of summer) so presumably will have at least some inflationary effect - my cynical view (partly informed by experience) is that handing such a "huge" lump sum out will be far too tempting for a significant percentage who will have spent it all within a week - I am not going to say "booze and fags" (those in work may need it to pay for fuel to get to work after all) but I doubt it will be entirely non-discretionary spend, if only because some are already saying they don't need it.

So will it be a one off blip in spending and then drop back? Pay down debts so no inflationary effect at all?

There's the oft-quoted aphorism that $1 of Government spending creates $100 of economic activity, but when that quote was made it was referring to stimulating companies in the same economy. Will this £650 go into the UK economy, or will it disappear overseas? Will that make a difference to the inflationary effects?

Lots of questions, to which I don't have the answers. Does anyone?

[Biggy Stardust]

Many will have zero self-descipline, will splurge the lot now & complain come winter that they can't afford the energy bills.

[pavarotti1980]

Biggy Stardust said:

Many will have zero self-descipline, will splurge the lot now & complain come winter that they can't afford the energy bills.

Splurge the lot? Its going to be via discount on your energy bill (which will already be more expensive anyway). What exactly are they going to splurge?

Unless you mean the extra bits for the poorest. The ones who will waste money will continue to do so and the ones who are choosing to eat or heat will probably still be in the same position and not be able to afford both

You do continually have a very low opinion of people who may not be as fortunate as you financially

Edited by pavarotti1980 on Friday 27th May 09:04

[Zetec-S]

pavarotti1980 said:

Splurge the lot? Its going to be via discount on your energy bill (which will already be more expensive anyway). What exactly are they going to splurge?

Nope. The "poorest" will be getting £650 straight into their bank account. My SiL is already looking at holidays...

[pavarotti1980]

Zetec-S said:

Nope. The "poorest" will be getting 650 straight into their bank account. My SiL is already looking at holidays...

See extra bit I posted

[Zetec-S]

pavarotti1980 said:

Zetec-S said:

Nope. The "poorest" will be getting 650 straight into their bank account. My SiL is already looking at holidays...

See extra bit I posted

Sorry, yes you edited while I was replying to your original post...

But my point still stands, there will be a lot receiving this cash who won't use it wisely...

[unident]

This might come as a surprise, but inflation is already running at a 40 year high around 9-10%. There’s likely to be very little impact from some people getting £650 in cash. Some people will piss their money away, that’s always been the way, the bigger issue is how we stop the primary drivers of inflation, not if some people you don’t like because they’re probably smelly and poor aren’t doing what you’d do and spending it on a new lease car, or gardener, or kitchen etc.

Edited by unident on Friday 27th May 13:22

[pavarotti1980]

Zetec-S said:

Sorry, yes you edited while I was replying to your original post...

But my point still stands, there will be a lot receiving this cash who won't use it wisely...

As is the way now. People spend on things which are not important. But then the majority in receipt of the £650 wont be as this might mean they can turn the heating on in January with a little bit less fear. Its not enough to help the real strugglers but better than nothing

[anonymoususer]

It will have an effect on inflation
It will also become a new standard that will be returned to as and when

I am genuinely shocked at the Conservative Government doing this
One thing I do note is that there was a lot of people in the other threads mentioning the bail out of the smaller companies
Without trying to be a "i was 1st" type I was chipping at that months ago and I find it genuinely shocking that some of these companies were even allowed to exist.
It seems a sham to me and personally I think its right up there with smart meters saving you money and the boiler replacement programme, cavity wall insulation promotions that seemed to benefit a lot of fly by night companies.
I'm not expressing it very well but it just smells to me

[Zetec-S]

pavarotti1980 said:

As is the way now. People spend on things which are not important. But then the majority in receipt of the 650 wont be as this might mean they can turn the heating on in January with a little bit less fear. Its not enough to help the real strugglers but better than nothing

I'm not too bothered about the amount, but I think it would make more sense to give it to them via a discount on their energy bills as at least it would achieve it's purpose.

[devnull]

I read a frothy comment on reddit where a 'high earner' got angry that they were getting this payment along with the more needy. You can actually donate the payment if you want, but I though it was a bit odd to make the comment in the first place as it is obviously going to get clawed back in taxation and inflation anyway, so just roll with it.

[pavarotti1980]

Zetec-S said:

I'm not too bothered about the amount, but I think it would make more sense to give it to them via a discount on their energy bills as at least it would achieve it's purpose.

I guess the increased cost of living isn't just energy but more discount on that would give them a bit more cash for food/clothes etc.

[Biggy Stardust]

pavarotti1980 said:

People spend on things which are not important. But then the majority in receipt of the 650 wont be as this might mean they can turn the heating on in January with a little bit less fear. Its not enough to help the real strugglers but better than nothing

Newsflash- they won't have the money come January as for many the first thought when receiving money is to decide what to dash out & spend it on. I've seen enough examples to know it happens.

As for it not being enough, how much do you think they should be insulated from the consequences of their life choices & why should the more prudent have to pay for it?

[pavarotti1980]

Biggy Stardust said:

Newsflash- they won't have the money come January as for many the first thought when receiving money is to decide what to dash out & spend it on. I've seen enough examples to know it happens.

As for it not being enough, how much do you think they should be insulated from the consequences of their life choices & why should the more prudent have to pay for it?

Newsflash, the world is not what you read in the Daily Mail.

Its not always "life choices" for people that end up on benefits but you knew that and just like to be edgy on the internet. But enough is when people are not in the defined bracket of fuel poverty (more than 10% of household income on fuel) and having to use foodbanks simply as a way of existing.

Edited by pavarotti1980 on Friday 27th May 09:35

[ATG]

Prices of energy and food have gapped up because of a supply shock. There's less energy and less food for sale. It's as simple as that, and no monetary intervention is going to tackle it, hence anyone blaming the Bank of England (like a bunch of cabinet ministers did a few weeks back) is an ignoramus.

This shock is a one off and indeed will eventually reverse, so what's the problem? Well, it's happened at a time of very, very low unemployment. If workers demand and receive pay rises in response to the supply side shock, they may trigger a sustained wage/price spiral where workers permanently anticipate high levels of inflation and the price of goods and services are constantly chasing after an ever increasing cost of labour. That would be a disaster. That's why the governor of the BoE was calling for wage restraint a month or two ago, and was met with a load of abuse by the usual idiots and charlatans.

Handing out a one off load of money to consumers should help reduce their anxiety about the increased cost of energy. That is directly targeting the fear of inflation that drives a wage/price spiral. From a consumer perspective this cash will tend to REDUCE inflation, not fuel it.

[Biggy Stardust]

pavarotti1980 said:

Its not always "life choices" for people that end up on benefits but you knew that and just like to be edgy on the internet. But enough is when people are not in the defined bracket of fuel poverty (more than 10% of household income on fuel) and having to use foodbanks simply as a way of existing.

Not always but often.

Your way forward would tend to remove all concept of personal responsibility & all incentive to improve one's position in life. Why make an effort when the bien pensants will make up any shortfalls?

[pavarotti1980]

Biggy Stardust said:

Not always but often.

Your way forward would tend to remove all concept of personal responsibility & all incentive to improve one's position in life. Why make an effort when the bien pensants will make up any shortfalls?

You must have some stats to be sure of such a position.

Of course there are wasters who will scrounge for every last penny but that does not mean everyone in receipt of benefits is the same. But if you already have the view that anyone less fortunate than yourself has no personal responsibility then nothing will ever change your opinion.

Oh and to use the phrase "improve one's position in life" shows you are a bit of tt to boot.

[Gecko1978]

ATG said:

Prices of energy and food have gapped up because of a supply shock. There's less energy and less food for sale. It's as simple as that, and no monetary intervention is going to tackle it, hence anyone blaming the Bank of England (like a bunch of cabinet ministers did a few weeks back) is an ignoramus.

This shock is a one off and indeed will eventually reverse, so what's the problem? Well, it's happened at a time of very, very low unemployment. If workers demand and receive pay rises in response to the supply side shock, they may trigger a sustained wage/price spiral where workers permanently anticipate high levels of inflation and the price of goods and services are constantly chasing after an ever increasing cost of labour. That would be a disaster. That's why the governor of the BoE was calling for wage restraint a month or two ago, and was met with a load of abuse by the usual idiots and charlatans.

Handing out a one off load of money to consumers should help reduce their anxiety about the increased cost of energy. That is directly targeting the fear of inflation that drives a wage/price spiral. From a consumer perspective this cash will tend to REDUCE inflation, not fuel it.

Its an increase in the money supply...it will fuel inflation but is what it is thr solution is food and energy security in the UK but we are years down then road from doing that

[Biggy Stardust]

pavarotti1980 said:

You must have some stats to be sure of such a position.

Of course there are wasters who will scrounge for every last penny but that does not mean everyone in receipt of benefits is the same. But if you already have the view that anyone less fortunate than yourself has no personal responsibility then nothing will ever change your opinion.

Oh and to use the phrase "improve one's position in life" shows you are a bit of tt to boot.

You do like to insult, don't you?

Instead of "improve one's position" I'll use the phrase "get themselves out of the st they got themselves into" if that would reduce your anger.
(Obviously the st they're in is the fault of anyone & everyone else but we can gloss over that detail)

[pavarotti1980]

Biggy Stardust said:

You do like to insult, don't you?

Instead of "improve one's position" I'll use the phrase "get themselves out of the st they got themselves into" if that would reduce your anger.
(Obviously the st they're in is the fault of anyone & everyone else but we can gloss over that detail)

But its true though you are a bit of tt. Your posting history as Biggy and before the name change as Rovinghawk is enough proof of that

As I said not everyone is in a position of being in the st through their own fault. If people are less fortunate than yourself they might appreciate some support instead of being told to "sort your st out". You sound like the MP who said to get a better paid job and work more hours to get through all of this