In a conference speech to Conservative Party members last October, Boris Johnson announced that the country was changing direction. “The present stresses and strains,” he said, were “mainly a function of growth and economic revival.” Wages were rising faster than before the pandemic struck, as Brexit turned off the tap of cheap foreign labour and brought better pay, more employment and higher productivity to British workers and businesses.
In the US, similar sentiments were held by the Biden administration. Even before the pandemic, Janet Yellen – now the US Treasury secretary – had expressed a desire to “run the economy hot”, allowing the pressure of demand to deliver higher wages. Policymakers reassured one another that the impending arrival of inflation would be “transitory”.
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