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(Not an economist by any measure) Can you explain "tax cuts which will have a big inflationary impact". The 20% bracket went down to 19%. The 45% bracket disapp

(Not an economist by any measure) Can you explain "tax cuts which will have a big inflationary impact". The 20% bracket went down to 19%. The 45% bracket disappeared (now included in the 40%) which is only for £150k+ earners, which is a tiny minority in the UK. I don't think the actual numbers move inflation. Isn't it more the conflicting policies (BoE and gov) in theory and the perception of them not being in the same page?

colinmhayes 4y ago
Increasing the money supply causes inflation. Rich people don't just put their money under their mattress. They invest it which means it's being given to other people who use it to buy things.
- mbrodersen 4y ago
  Or the invested money will simply drive up share prices without giving anybody else money to buy things.
- rvieira 4y ago
  I understand why that might cause inflation. The projected cost is £55b, is this really enough to put the country in an inflationary meltdown? IMHO the problem is that none of these measures actually guarantee (or even promote) economic growth and the realisation that the UK has economic illiterate leaders it's what's freaking the markets.
  - psd1 4y ago
    To be more precise, the market has realised that the economic illiteracy of our leaders is worse than previously feared. And I use "leaders" with scornful irony
- klyrs 4y ago
  > They invest it which means it's being given to other people who use it to buy things. Now do real estate investing.
  - colinmhayes 4y ago
    Real estate investing means either paying people to build things for you, or paying people for something that's already built. Obviously building things causes inflation as you compete for commodities required to build, but buying already built real estate also means the seller now has money that they invest and that will eventually get consumed too.
origin_path 4y ago
Yeah, the idea it's the tax cut isn't correct. That's not even a big tax cut. It's the energy price cap that utterly dominates. The left will insist otherwise because they hate tax cuts and love price controls, but that doesn't make it accurate.
- adammarples 4y ago
  The carnage happened at 9.30 am on Friday directly after the budget announcement, caused by the budget announcement. Energy subsidy was proposed earlier in the week. The market suddenly realised that kwasi and liz are irresponsible idealists and acted accordingly.

colinmhayes 4y ago

Increasing the money supply causes inflation. Rich people don't just put their money under their mattress. They invest it which means it's being given to other people who use it to buy things.

mbrodersen 4y ago
Or the invested money will simply drive up share prices without giving anybody else money to buy things.
rvieira 4y ago
I understand why that might cause inflation. The projected cost is £55b, is this really enough to put the country in an inflationary meltdown? IMHO the problem is that none of these measures actually guarantee (or even promote) economic growth and the realisation that the UK has economic illiterate leaders it's what's freaking the markets.
- psd1 4y ago
  To be more precise, the market has realised that the economic illiteracy of our leaders is worse than previously feared. And I use "leaders" with scornful irony
klyrs 4y ago
> They invest it which means it's being given to other people who use it to buy things. Now do real estate investing.
- colinmhayes 4y ago
  Real estate investing means either paying people to build things for you, or paying people for something that's already built. Obviously building things causes inflation as you compete for commodities required to build, but buying already built real estate also means the seller now has money that they invest and that will eventually get consumed too.

origin_path 4y ago

Yeah, the idea it's the tax cut isn't correct. That's not even a big tax cut. It's the energy price cap that utterly dominates. The left will insist otherwise because they hate tax cuts and love price controls, but that doesn't make it accurate.

adammarples 4y ago
The carnage happened at 9.30 am on Friday directly after the budget announcement, caused by the budget announcement. Energy subsidy was proposed earlier in the week. The market suddenly realised that kwasi and liz are irresponsible idealists and acted accordingly.