When lockdown ends, be prepared for an inflationary surprise

The government is pouring more money into the economy to tide businesses over the latest lockdown. Once lockdown ends, says John Stepek,we should see a significant bounceback in demand – and in inflation.

Pedestrian on Oxford Street
Once lockdown ends, pent-up demand will drive inflation
(Image credit: © JUSTIN TALLIS/AFP via Getty Images)

In summer last year, as Covid-19 eased off for a bit, chancellor Rishi Sunak was beginning to drop hints about tightening the purse strings again. Or at least, suggesting that he was considering how he’d go about slowing the growth in Britain’s debt pile, rather than adding to it at a rate of knots.

That was a little premature, of course. By the end of 2020, the furlough scheme had already been extended significantly. And now that we’re all in an even tighter lockdown once again, there’s really only one option for the Treasury – to chip in even more assistance to the businesses and industries that will be forced to shut down.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.