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  • Writer's picturePhillip Ullmann

Looking the wrong way: The Government reshuffle shows they’re missing the point

As the Titanic hit its iceberg so is our economy on course to collide with an almighty reckoning.

The Government has reshuffled the deck(chairs) but they’re looking in the wrong direction.

The risk of a significant crash in the world’s financial markets has not gone away simply because inflation appears to have eased off a little, and central banks may pause their rise in interest rates.

For example, in little more than 12 months the UK bank rate has multiplied from 0.1% to 4%. That means the cost of borrowing is now 40 times higher than it was a year ago.

It’s the same in the US, Europe, and elsewhere around the world.

When costs shoot up that far and that fast (don’t forget the cost of debt is still a cost), there are consequences.

We haven’t felt them all yet but believe me they’re coming.

As an example, the Bank of England’s own report (link here) suggests the number of people struggling with mortgage costs will climb over the course of this year towards the level of the great financial crisis in 2008.

It goes on to say up to 4 million households will face negative impacts from rising interest rates in 2023.

The Bank says these pressures could cause significant cutbacks in spending or even defaults, posing a risk to the country’s financial stability.

Even more concerning is a report by The National Institute of Economic and Social Research (NIESR) published yesterday which states that one in four UK households will be unable to pay energy and food bills in 2023/24!

This is totally unacceptable.

Yet they persist in raising rates. Why?

How are they helping anyone other than the banks which are the end recipients of all these extra debt payments?

So, what should we do instead?

My urgent suggestion is that we start a national conversation about how we want to tackle the problems facing our country and how we should deal with the oncoming crash.

My belief is it starts in the economy. Our financial system is warped and we must not pour more printed money into the banking system from the top down.

We can adapt - and we can build an economy that thrives. But we need to talk about how to do it starting now

There is so much talent and energy in our country, people with ideas and skills who long to work.

I’ve seen it in my previous career running one of the UK’s largest recruitment companies.

We can create communities with thriving services and businesses that support them. We must focus on these as our starting point.

A completely new purpose led lending system,

  1. Charging no interest

  2. with an inbuilt debt forgiveness cycle of say 7 years

  3. based in the regions and

  4. focusing on meeting the needs of people, place, and planet

would be transformative and would enable us to reset our economy and thrive as the 21st Century evolves.

Join me in my quest to drive change – there’s an exciting future out there – if we head in the right direction! #phillipullmann #bankofengland #ukinterestrates #debtcrisisuk



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