There is a cynical lie being pushed by globalists, remainers, and their media allies that Brexit is the main cause of our inflationary problems. This argument is a disingenuous distortion of the truth.
Inflation is defined as a general increase in prices and a fall in the purchasing value of money.
Whilst inflation is currently a worldwide problem, our government has maintained policies, nothing to do with Brexit, that greatly exasperated Britain’s inflationary problems.
Since 2009 the Bank of England (BOE) has been engaged in a Quantitative Easing (QE) program combined, until recently, with historically low-interest rates. In total, the BOE purchased 895 billion worth of bonds. The effect of QE has been an increase in Britain’s money supply; where in January 2010 our money supply was £2,092 billion which rose to £2,976 billion by December 2021 – which equates to an increase to our money supply of over 40% over 11 years. This means more money is available to chase the same amount of goods and services, leading to an increase in demand which in turn causes an increase in prices.
Another factor that has caused an increase in demand for goods and services in Britain is our rapidly increasing population. Since 2008 our population has increased from 61.81 million to 67.02 million in December 2022 – an increase of over 8%.
On top of the ‘Demand-Pull’ inflation caused by increasing the money supply and growing population, Britain has also experienced significant ‘Cost-Push’ inflation caused by several factors that also have nothing to do with Brexit.
In the long term, businesses can only operate if they are profitable, so if they experience increases in their cost of delivering goods or services to the customer, they must find efficiencies or pass on those cost increases by increasing their prices, causing inflation. British businesses have experienced many such cost increases.
One of the primary costs facing businesses in delivering goods and services is the cost of energy, either in the form of electricity or fuel. As of February 2023, our electricity cost increased by over 66% over 12 months from 2022. Similar increases have been felt in natural gas/LPG, petrol, and diesel prices over the last 24 months. For example, average petrol prices in April 2020 were 106p per litre which rose to 184p per litre in July 2022. Similarly, natural gas prices have also exploded over the last 2 years, rising from 12p per therm in May 2020 to a peak of 356p per therm in August 2022.
These huge increases in energy costs are primarily due to our government’s Net 0 policies and supply constrictions caused by the Ukraine war, sanctions on Russia, and the destruction of Nord Stream 2 gas pipeline. So our energy price increases have been caused by political decisions and cannot be blamed on Brexit. However, the extra burden of these energy costs faced by British businesses would inevitably be passed on to the British public as inflated prices.
Furthermore, an additional huge increase in costs faced by British businesses is a result of the imposed lockdown associated with the Covid pandemic. Paying staff to stay at home, for many businesses, equated to paying people to do nothing. Having the country stay at home for months on end also affected the demand for products and services, dramatically affecting business profitability. People sitting at home don’t spend as much money. It was inevitable after such an enforced national lockdown that businesses would need to put up their prices to recover their losses.
Another knock-on effect of our government’s Covid lockdown with associated furlough costs was to plunge Britain’s finances into crisis, forcing record taxation, both corporate and also for employees. These huge tax increases have in turn pressured staff and companies to push up their prices to make up the difference.
Brexit, without a trade deal with the EU, will inevitably have had some inflationary influence on products imported from the EU and will have increased the end-cost of our products sold into the EU. However, inflation on imported products purchased from the EU as a result of increased tariffs is minor compared to the weight of inflation caused by BOE Quantitative Easing and increased energy costs.
It is in everyone’s interests that a favourable trade deal is eventually reached between an independent Britain and the EU, regardless of plotting by fanatic Europhiles seeking to use economic blackmail in return for political control.
Therefore, it is clear that the inflationary influence of Brexit is short-term and small compared to other inflationary factors facing Britain.
The sad truth is Mark Carney, the economist, knows that Brexit is not the primary cause of our inflationary problems. But this week, have we been hearing from Mark Carney the politician, pushing a globalist agenda?