Will inflation bring back austerity?

The return of inflation has changed politics, I say in the Times today . Until recently, it was possible to argue that the government should borrow to slashes taxes, or to cover almost any additional spending. It was so cheap to do so that it was almost rude not to, the argument went. Inflation was also dismissed as a dog that hadn’t barked since the early 1990s. Johnson was relaxed, while last September Liz Truss thought that – if necessary – borrowing would be a better way to pay for the government’s social care policy than raising National Insurance.

But debt payments are now expected to quadruple. They will absorb an extra £96 billion between now and 2027, which puts a limit on how much more the government should want to borrow. With the tax burden heading to a 77-year high, the prospect of raising taxes further is hardly appealing.