Quote Originally Posted by BCram View Post
Income Tax provides about 25% of all tax revenues for the UK government. The method for controlling inflation is interest rate management. Inflation starts to rise, put the interest rate up to stifle demand. Keep putting it up until the economy is strangled and everyone is knackered then once the rate of inflation has fallen back, drop interest rates to help revive the economy that has just been strangled near to death.

That used to be the way things worked.

Since 2008 when Gordon Brown saved the financial sector with massive government injections of cash, interest rates have been very low, and much below trend rates. Some mumbo jumbo about Keynesian economics where governments were originally encouraged to borrow money to "invest" in infra-structure projects has been subverted to allow the financial sector to invest in stock markets around the world. The original idea of creating employment for manual workers who had money to spend in local shops and on local services has completely disappeared. Governments are bullying everyone because they are creating money. Needs a re-think IMO, but I would not go so far as to advocate state ownership or communism.
Govt needs inflation up now.