Starmer's price freezes will do little to ease the cost of living crunch, warns ALEX BRUMMER
Keir Starmer is pledging an assault on the cost of living as the centrepiece of his plan to stay in office.
The PM believes that steps taken, such as the freeze on rail fares, the one-off reduction in household energy bills and a hold on prescription charges, will deliver a political lift.
Government can make a difference to administered prices.
The Bank of England estimates that Budget measures will lower consumer price inflation by a half-point by April. The Bank, with responsibility for taming inflation, is swimming against strong tides.
In its New Year edition, the Economist magazine labelled ‘affordability’ as its word of 2026. Oil prices may remain low by recent historical standards.
But energy costs are on an upward trajectory. The expense of funding data centres, to power the AI revolution, and investing in renewables will keep electricity prices perking.
Giveaway: Keir Starmer believes that steps taken such as the freeze on rail fares, the one-off reduction in household energy bills and a hold on prescription charges will deliver a political lift
Visitors to pastoral Suffolk in the coming months and years will understand why. Heading towards the coastline near the popular Southwold resort are multiple roadworks.
The disruption is preparation for construction of Britain’s next super-power station at Sizewell C.
Publicly quoted National Grid, meanwhile, is building substations, laying super power lines and erecting out-sized pylons to transport nuclear, solar, and other energy sources across the country.
The multi-trillion race by Silicon Valley to win the AI war is an inflationary force driving up the cost of advanced chips and power on both sides of the Atlantic.
The vast amounts of borrowing required will likely keep interest rates higher than they would otherwise be.
Freezing UK rail fares might be pleasing to commuters. But it is a cost on the Government balance sheet as Great British Railways, now in public ownership, steams into view.
Administered price cuts simply seek to offset higher costs. The employer’s National Insurance increase, in Labour’s first Budget, may have been absorbed.
However, a jump in the National Living Wage, the Employment Rights Bill and above-inflation settlements at the country’s biggest employer, the NHS, are all costly.
Food prices refuse to be subdued, with the British Retail Consortium cautioning they will remain sticky in 2026, after rising at 3.3 per cent in December. Fresh food costs are rising at 3.8 per cent, or almost twice the Bank’s inflation target.
The Old Lady finds itself on the horns of a dilemma. It has been slower than central banks in Europe to bring inflation back to target, and hawks, including influential voices such as chief economist Huw Pill, fear the consumer price genie is not back in the jar.
Interest and mortgage costs may edge down, but housing affordability looks unlikely to improve dramatically. Starmer is backing the wrong horse again.
Noisy Auction
The attraction of the vintage, whether fashion, furniture or cars, is strong.
As a pioneer in online auctions, bringing together buyers and sellers across the globe, Auction Technology Group ought to be at the forefront of that revolution.
ATG is battling against its biggest shareholder FitzWalter, which owns a 21 per cent stake, and at last count had made 11 bids for full control since September last year.
FitzWalter’s case is simple. The share price has halved, earnings slumped, and shareholder funds wasted on daft acquisitions.
In reply, ATG argues that its share price ‘is disconnected from the company’s fair value’ in the light of a London discount.
Private equity outfits such as FitzWalter seek to make quick profits at the expense of existing shareholders. FitzWalter is frustrated at the auction group’s refusal to engage, and its next move could be to requisition an extraordinary meeting.
Placing ATG under siege is not ideal. Time for the Takeover Panel, keeper of City VAR, to intervene.
Texas chic
Addicts of Paramount’s new hit oil patch series Landman might be surprised that luxury US retailer Saks Global is suffering a cash shortfall amid ructions at the top.
Most episodes show leading spouse Angela Norris (actress Ali Larter) descending the steps of a private jet weighed down by bags from Texas store group Neiman Marcus, part of the Saks empire. Chapter 11 would not be best for the imagery.
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