Have we returned to the Phillips Curve which described a macro-economic policy choicei.e a trade off between inflation and unemployment? The Bank of England predicts an inflationary blip, and yet labour shortages in the UK seem endemic. The Govt’s policy is to constrict labour supply by restricting immigration which is increasing wage costs and effectively reducing gross national product. It’s not wages that are problem, although in many sectors they remain are too low and subsidised by in-work benefits, but a lack of workers. Time for the QMT loonies to pull their heads in, as explained by Simon Wren Lewis in his near rant on the elitist pessimism of the inflationary hawks.

Why inflation?
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