Government policy could hurt inflation target

IPSE has urged the government not to introduce inhibiting policies after ONS data released today showed that inflation remained at 2.4 per cent, contradicting forecasters’ predictions that it should fall.  

The inflation rate of 2.4 per cent is still above the Bank of England’s target rate of two per cent. Since the UK voted to leave the European Union inflation has remained above the target, but forecasts predict that the rate will reach two per cent before the end of 2018.

Tom Purvis, IPSE’s Political and Economic Advisor, commented: “While our Confidence Index shows that freelancer day rates are outpacing inflation, it is a slight concern that today’s figures haven’t confirm forecasters’ predictions that inflation would continue to fall.

“These worries could be exacerbated with the government considering implementing two inhibiting policies – rolling out IR35 changes to the private sector and lowering the VAT threshold – both of which would ensure that inflation rises.

“On top of those longer-term concerns, the immediate news throws up concerns for the self-employed. Transport is cited as the main driver of inflation according to the ONS. Self-employed people will be hurt by this considering they typically rely on transport far more readily than employees as they travel to clients or to pitch for work.

“The self-employed are one of the UK workforce’s greatest assets, driving growth, innovation and flexibility. But if the Bank of England are to reach their target rate of two per cent, the government must not introduce policies that will both see inflation increase and self-employed income squeezed.”