Tuesday, October 14, 2008

Meanwhile, Back In The Real Economy...

Brown's big bank bail-out came down with a bump today as, back in the real world, inflation hit home at above the 5% mark. Bailing out banks with taxpayers cash keeps the stock market happy but people are asking, what's in it for us? For the moment, not a lot. 

As the focus switches to the fall-out from the bank bail-out, even the government's much loved and discredited Consumer Price Index (CIP) is now weighing in at a hefty 5.2%, up from 4.7% in August. Now the highest in 15 years.

A better indicator, the Retail Price Index (RPI), ditched by New Labour in 2003, was already at 5% last month. 

The CPI may be a less effective measure of price rises than the old RPI, but it's much easier to manipulate. But even the spin can't halt the upwards march.

Even these official figures mask what's happening in the real world and tell people what they know already. Food prices and, in particular those obscene gas and electricity bills, are going through the roof, while Brown borrows billions of pounds to pop up the banks and get us all deeper in debt. 

The UK's annual rate of inflation rose to 4.4% in July, up from 3.8% in June, as measured by the CPI. That was the biggest monthly change in the annual CPI rate since records began in 1997. And it's just getting worse. 

The annual rate of inflation for energy and other household bills has now reached 15%.

It will be this real economy of jobs, inflation, mortgages, small businesses and meagre wage rises which will determine Brown and the government's future.

The recriminations have already begun. Cameron and the Conservatives have started to focus on that real economy and at the same time hit home on the decade of Brown's incompetence and the false boom years which got us in this mess in the first place. 

Voters have short memories. Brown's bounce will be short-lived. It is inflation, unemployment and spiralling debt, trying to make ends meet, which is the bogyman for the government, not the banks. After the boom, the gloom.

The nitty gritty of life determines the success of governments and whether they survive, not hugely expensive quick fixes for the City.

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