Quote Originally Posted by MadAmster View Post
Doesn't help those without savings for a start.

Also, If I have £1000 a month to spend and months ago that was £200 mortgage, £200 energy, £50 council rates, £350 food and £50 at the pub, that would now be (figures for illustration) £300 mortgage, £400 energy £50 council rates which is £750. That leaves £250 for food. OK, so I can shop at Lidl or Aldi as they tend to be cheaper which will help a bit. We also eat less and less well and might just about survive. However, the shop is getting £100 a month less from me and probably a similar amount per month less from most of their other customers as well. Big drop in shop takings will lead to job losses. Same at the pub. I now have no money to spend there so I don't go and others are in the same boat so less bar staff are needed. Less shop staff and barstaff and they are now on the dole paying less tax......
From the big economy point of view you're still spending more - which is why you will feel poor. The money still circulates and so stimulates. At a micro level you are right and certain sectors will shrink, which are those that the consumer reduces spending in.

I'm not suggesting that this strategy will work, or even that I think it's right, just how it's supposed to work. It's more appropriate for a stagnant economy with unemployment, and our current economy seems to feature businesses struggling to find staff. The pandemic has changed a lot of the dynamics of the economy and I suspect the experts are maybe backing the wrong horse...but only time will tell.

rA I've just thought of another way of putting it. People feel poor because the spend more.