Donation amount

Sign up to the Bow Group Mailing List

* indicates required

Conservative Revolution

Britain and the world’s oldest conservative think tank

Conservative Revolution

Britain and the world’s oldest conservative think tank

Inflation: pandemic consequence, government negligence or globalist obedience?

Apr 4, 2022 | Articles, Featured Post, Publications | 0 comments


Inflation is roaring and it has only just begun. This article will examine what foreseeable actions the government could and arguably should have taken to mitigate the stimulae, extent and duration of surging inflation.

When the Office of Budget Responsibility (“OBR”) (which is almost as badly misnomered as the Conservative & Unionist Party) is forecasting average inflation will not fall below 4% before the end of 2023, this virtually guarantees that: 

  1. OBR forecast of Consumer Price Index inflation (“CPI”) peaking in Q4 of 2022/23 fiscal year at 8.7% and will remain above 4% in 2023/24 fiscal year will undershoot reality;
  2. As economic growth is now forecast at 3.8% for 2022/23 (down from 6% in October 2021) and below 2% in 2023/24, we are set for 2 years of stagflation (where inflation outpaces economic growth);
  3. “Real life inflation” (which will be the subject of a separate research piece) is at least double the current level of CPI. Current level is 6.2% so “real life inflation” is at least 12.4%. That is before domestic energy bill increases averaging 54%.

With average wage growth at 3.8%, taxes rising year on year throughout the remainder of this parliamentary term (to the highest level since 1945) and living standards falling at the fastest rate since records began, the UK is set for significant economic pain, not least for millions who will be dragged into fuel poverty.

Given the forecast fourfold increase in National Debt servicing costs from £21Bn in 2021/22 fiscal year to £83Bn in 2022/23, the economic horizon is increasingly gloomy. 

Around 20% of the National Debt (£500Bn) has debt servicing costs pegged to the Retail Price Index (“RPI”), which is currently at 8.2% and set to rise, debt servicing of this amount will increase commensurately. 

On 28th March 2022 in the House of Commons, Siobhan McDonagh (Labour MP for Mitcham & Morden) said:

“We have a tax burden rising to the highest level since the 1940s, the worst fall in living standards since the 1950s, public sector net debt reaching the highest level since the 1960s and real earnings growth facing the largest one-year drop since the 1970s”.

This is not what the electorate voted for in December 2019.


The government will argue that the pandemic derailed economic normality and shattered inflation stability. Even the most churlish analyst would argue they are right (to some extent) but largely for the wrong reasons. 

The government, with the unbridled support of the toothless opposition, locked down the country on 3 separate occasions despite inter alia:

  • A “successful” vaccine rollout programme;
  • Closing schools despite de minimis risk to children without co-morbidities (leading to reduced parental economic output);
  • Storing up a National mental health time bomb;
  • Many more people dying with COVID-19 than from COVID-19.

No doubt there will be a public inquiry at some stage which will examine the efficacy of the government’s COVID-19 strategy from a health and social care outcomes perspective but it is telling that the average age of someone who has died with COVID-19 on their death certificate to date is a year higher than average UK life expectancy.

Returning to the economic damage wrought by COVID-19, the government’s response to the pandemic was to splurge money relatively indiscriminately and whilst inevitably not everyone benefitted either directly (furlough) or indirectly (government guaranteeing hundreds of £Bns of corporate loans), most did. 

This largesse, unprecedented in peacetime helped to deliver a much lower rise in unemployment to the extent that in February 2022 it is lower than in February 2020, just before the pandemic took hold and lockdowns began but at an eye watering cost, that will take several generations over 100 years to repay. 

Pandemic spending, (including additional government borrowing as a consequence) is over £500Bn. As 3 in 8 bounce back loans to industry (£50,000 per loan with modest eligibility criteria and 100% government guarantees) have defaulted, it is reasonable to assume that a proportion of larger corporate loans (with 80% government guarantees) will also default.

The total cost of COVID-19, including additional spending on clearing the NHS backlog of operations and assuming modest business defaults is likely to exceed £600Bn. As economic conditions worsen by the regime debt servicing costs are added, that figure could conceivably reach £1Trn. It will definitely increase appreciably.

Bank of England Monetary Policy Committee (“MPC”)

25 years ago this May, Tony Blair took office. Blair and Gordon Brown, in an effort to convince those sceptical of newLabour’s economic competence, decided to devolve control of inflation (and with it the money supply) along with the setting of interest rates to the Bank of England. 

The Labour Party had been out of power for 18 years and its last period in office included:

  • 27% inflation;
  • 17% interest rates;
  • A bailout from the International Monetary Fund;
  • 98% marginal rate of taxation on “the rich” leading to many millionaires living offshore.

Within a year, the Bank of England Act 1998 was passed and the “independent” Monetary Policy Committee (“MPC”) was formed.

For the first 5 years of its existence the MPC had to maintain inflation below 2.5% and was pegged to the RPI. 

In 2003, Gordon Brown, changed the target to maintaining inflation below 2%, pegged to the CPI. Put simply, the CPI has more carve outs (as reflected in its current rate of 6.2% compared to 8.2% RPI). This impugned the independence of the MPC.

My belief at the time is unchanged today. Delegating monetary policy, inflation control and interest rate setting responsibilities away from the Chancellor of the Exchequer was a cynical dereliction of governance in exchange for short-term political expediency. 

In the first 8 months of the pandemic, the Bank of England embarked on £250Bn of Quantitative Easing (“QE”) to provide additional liquidity. This is commonly known as printing money.

QE, used appropriately, lowers the cost of borrowing throughout the economy, including for the government. QE works by lowering the bond yield or “interest rate” on UK government debt (also known as bonds). It adds liquidity to support economic growth but if overused will, over time, stimulate inflation. 

Having studied the virtual parallel actions of other Central Banks, including notably the US Federal Reserve and European Central Bank, a sceptic might conclude there is a “globalist” blueprint that one might even term a Ponzi scheme conspiracy that led to:

  • Loose monetary policy, in the case of the UK and US in particular through excessive QE;
  • QE continuing to be exercised to mitigate a financial storm that had already passed;
  • Excessive delay in iteratively increasing interest rates, balancing the risk of consumer debt defaults, including mortgage repossessions) with the inevitable risk of inflation as the threat of COVID-19 receded, economic conditions improved and pent up demand for goods and services was unleashed.

The World Economic Forum

The World Economic Forum (“WEF”) is a malevolent, metastasising force with tentacles and principles including:

  • Digital currency;
  • Social credits, including control of individuals’ purchases;
  • Both “Build Back Better” and Net Zero zealotry;
  • No electoral mandate whatsoever;
  • Financial and physical support of notable billionaires including George Soros, Mark Zuckerberg and Bill Gates.

The WEF is controlling the globalist agenda, at a time when it has never been clearer that globalisation has failed and must be consigned to the dustbin of history.

The United Kingdom electorate did not knowingly vote to leave one globalist cabal of unelected bureaucrats intent on overriding democracy and turning their part of the planet into a border free zone, to join another one by stealth, with no debate or democratic mandate.

If you are not aware of the World Economic Forum, start doing some homework. It is in plain sight on their web site. The next 2 men in the line of succession to the throne of HM The Queen are immersed, as is our Prime Minister and senior members of the government. It is time to wake up, stand up and push back, before our civil liberties are further eroded.

Many commentators far more eminent than me believe the WEF is a malign force that has infiltrated governments, Big Tech, Big Pharma and is responsible for iteratively increasing population suppression and censorship. 

The truckers’ protest in Canada that led to:

  • The suspension of bank accounts;
  • Cancellation of credit cards;
  • Sequestrations of trucks;
  • Imprisonment of protesters exercising free speech;

in a Western Liberal Democracy should make everyone stop and think. If it can happen there, it can happen here. 

Some may feel that the 2 years of the Coronavirus Act, replete with emergency powers never before seen in peacetime or wartime, given:

  • The gross intrusion and restriction of our civil liberties;
  • 30,000 mandatory sackings in the Care sector due to vaccine hesitancy;

and countless other pernicious and iniquitous acts, it has already happened here.

Once you have read the WEF agenda, you may feel it appropriate to question more deeply why so many of the world’s population, through our Central Banks’ mirrored (failed but in lockstep) monetary strategies are staring at long-term economic decline and ongoing changes to demography that are increasingly bleaching away traditional British conservative values.

Russian invasion of Ukraine

A truce in Ukraine as soon as possible would of course be beneficial from a humanitarian, geopolitical and economic perspective for the people of Ukraine and the wider global population but to mask rising inflation with Slavic war is contemptible and disingenuous.

Whilst undoubtedly inflation will be further impacted by a prolonged Russian invasion of Ukraine, it would be mendacious to pretend that inflation was not already “baked in” before 24th February 2022.

The Bow Group – we have been saying this for years

The Bow Group highlighted many of the issues raised in this article over a decade ago and have repeatedly called for government to rethink. 

Where many so called conservatives will jump on the latest bandwagon, our values do not bend with the latest change in wind direction. 

We have no hesitation in calling for the government to pivot away from economic Armageddon which is entirely foreseeable and therefore avoidable. Instead of bracing for the impact of an iceberg, it is common sense to avoid it. 

If we refuse to learn the lessons of the financial crisis and row back from profligacy with taxpayers money, our economic standing on the world stage will diminish to the point of irrelevance.

The current levels of inflation, national debt, government borrowing to fund current expenditure and inexorable increases in personal and corporate taxation are unsustainable. 

Our proposal is to cut wasteful expenditure, eliminating the need to borrow for current expenditure and instead generate a surplus to begin repaying the almost £2.5Trn of national debt accruing (which is estimated to cost £83Bn to service in 2022/23 fiscal year).

In the 2020/21 fiscal year, government borrowing was £327.6Bn, which was predominantly borrowed to fund the hiatus in the economy occasioned by COVID-19.

In the 2021/22 fiscal year, this has fallen to £138.5Bn at the end of January 2022, which pro rated would equate to full year borrowing £166.2Bn, almost half the previous year, again reflecting the impact, albeit declining, of pandemic spending. 

The Bow Group believes that it is feasible to strip out £250Bn of wasteful government spending. Examples of unnecessary, vainglorious governmental largesse, include:

  • HS2 – £100Bn (“total cost”) and rising (£150Bn is more realistic). Most government infrastructure is delivered substantially over budget and materially late – Crossrail, a much smaller undertaking is almost 3.5 years late and £Bns over budget);
  • International aid – despite the (temporary) reduction from 0.7% to 0.5% of GDP, this still equates to £10Bn a year and would increase to £14Bn if 0.7% was restored, as many “Conservatives” wish. Beneficiaries include China, India and Pakistan, all nuclear nations who are forging deeper trading relationships with Putin’s Russia;
  • The BBC is effectively “owned” by the Department for Culture Media & Sport. It would be within their powers to sell it off to the benefit of the taxpayer. Valuations are complex and there are pension obligations, but Sky is valued at circa £20Bn. The BBC has the potential to achieve a higher valuation;
  • Net Zero – Only Philip Hammond has put an estimate to the cost of achieving this target which will provide no material benefit to the environment but will hobble the UK economy and make all of its citizens much poorer. Hammond suggested £1Trn in 2019. Analysts speculate that between £1.5Trn and £2Trn is nearer the mark;
  • Support for divisive charities, such as Stonewall, whose pursuit of “gender trumps immutable sex” is finally being challenged, not least by biological women;
  • Spending on diversity consultants and other special interest groups who are increasingly overrepresented relative to the number of people they represent;
  • Recoup the proceeds of COVID-19 fraud. Furlough was open to abuse as P&O exemplified for all the wrong reasons but others flagrantly broke the law. Government backed lending to industry has seen 3 in 8 “bounce back” loans (up to £50,000 and 100% government guaranteed) have defaulted with bogus companies and fraudulent recipients rife. If these amounts are repeated on larger loans (which are 80% government guaranteed, the amounts involved will soon add up to £Bns).

We would urge the “low tax” Chancellor to be bold, consult the Laffer curve, reduce taxation (which will swell tax receipts at the Treasury) and focus on core conservative principles, which the silent majority in the United Kingdom crave. 

By abandoning the slavish pursuit of Net Zero and instead aligning with traditional conservative principles to deliver affordable domestic energy given we have the available resources to being net exporters, the Chancellor would show that the Conservatives are not tin eared about fuel poverty.

We won’t however hold our breath.

We believe that spending on issues which offer clear benefit to the taxpayer such as healthcare and infrastructure should not be cut, nor should any government cuts fall on the poorest in society.

The methodology of any cuts should be to identify expenditure that does not or will not benefit the public, with the purpose of averting a financial crisis that will hurt almost every member of the public.

It is possible to immediately identify cuts the government could roll out that would not decrease standard of living, but in scrutising the whole of government operation and looking at wasteful spending like diversity and green consultants under a microscope, we believe over the course of a year far greater savings could be identified. 

These savings would not only remove the reliance on borrowing, they would also allow us to begin to release existing debt and cut tax. 

The Government has a panoply of tsars for LGBTQIA+ rights, diversity, climate change, but not a single one looking at wasteful spending. Margaret Thatcher’s former Head of Policy, Sir John Redwood would be the ideal man to bring this government back to reality.

The reality is that this “Conservative” government is operating with the highest levels of taxation and profligacy in our history. They have almost tripled the national debt having promised to get it under control, and most of it was done long before Coronavirus and Ukraine.

It is no good just saying the words that they believe in low taxes, low debt, responsible spending and cutting immigration, whilst doing the opposite.

Unless they wake up to the bitter reality that their actions thus far have caused the problem, they will never understand how to fix it, and will condemn us all to economic purgatory.

Author: Chris Davies, Research Fellow for Economy