Featured Post from Aston University

GEORGE FEIGER

Jul 27, 2022

5 min

Inflation: Simple Causes But a Complicated Cure



 JULY 2022


We face a wave of strikes, intended to restore the purchasing power of wages in face of inflation. But strikes cannot succeed in restoring everyone’s purchasing power. In the near term, inflation’s impact on living standards can be significantly mitigated only by importing more and so increasing our trade deficit, financed by foreign borrowing. Unwillingness to do that means we are likely to prolong the wave of strikes and so suffer a bruising recession created by restrictive monetary policy. This will cause yet more damage to living standards.


However, debt-funded importing of consumption items in order to maintain living standards is poor policy longer-term. It can’t stop the harmful redistribution effects of inflation that are already emerging. Most important, it doesn’t address the longstanding source of our lagging living standards – too little economic growth and economic resilience due to our failure to grow productivity. Without increased productivity, debt-funded consumption repair will cumulate to tomorrow’s fiscal crisis.


Therefore, we face a very difficult policy challenge. We must act to support living standards over the next year or two, mitigate the social problems that inflation is already causing and, simultaneously, divert our priorities (and our continuing borrowing) to foster much improved productivity growth.


Causes



This is a simple story. Today’s inflation demonstrates that we are poorer than we were three years ago. The value of what we, collectively, produce and earn, has shrunk, relative to the cost of the things that we seek to consume. Inflation constricts our consumption options to what we can now afford.


We are poorer for two reasons. First, because we produce and earn less domestically, and second, because the things that we don’t produce but import have become scarcer, forcing us to pay more to get them.


• Brexit caused an immediate and seemingly permanent devaluation of Sterling, raising the costs of everything that we import. It also seemingly permanently reduced our exports to the EU, our largest trading partner. No new trade possibilities are similar in scale, so there is a long-term loss of income. Moreover, increased non-tariff barriers have raised the cost of imports from the EU beyond the exchange rate effect.


• The pandemic has reduced the worldwide supply of all sorts of goods, therefore raising their prices. This is due to supply chain problems, the zero-Covid China lockdown, the reduction in UK output because a significant portion of the population is out with Covid at any time. Crops are left rotting in the fields because there aren’t enough domestic agricultural workers and, of course, no more EU farm workers.


• The war in Ukraine has escalated the costs of energy and food grains. In the future it will propel redirection of domestic resources to the production of war material, which is not edible.


Consequences



Inflation not only makes us, collectively, poorer, it differentially distributes the pain.


• Everyone in the UK could go on strike to try to raise their wages enough to maintain their real consumption. But as the pie has shrunk, that is impossible. The extra money people get will simply chase the same, smaller amount available and the prices of goods and services will rise further. If the ensuing price rises provoke further wage increases, we chase our tails. This is the wage/price spiral that the Bank of England fears.


• Some groups have more wage bargaining power than others. Perhaps the railway unions can indeed hold the country to ransom and regain their purchasing power. But then others, less empowered than railway workers, will become greater losers.


• Inflation causes a flight to real assets – houses, commodities – whose values float up with the price level. Because ownership of real assets is very unequally distributed, the asset-rich minority is likely to come out better than before while the asset-poor majority lose even more. The purchasing power of people living on fixed-return assets such as retirement annuities would be devastated by a wage/price spiral. Similarly, as interest rates rise with the price level (or even faster if the Bank of England has its way), debtors on floating rate loans will be hit hard.


• Different geographic areas have different mixes of people who would be gainers and losers from a wage/price spiral, exacerbating our substantial regional inequalities.


Cure Part 1: Near-Term Mitigation



How is it possible to offset the fall in current consumption which is provoking the wage/price spiral? People can consume more than they earn only by borrowing. The key is how that borrowing is undertaken. Households could borrow from private UK lenders, or the state could sell bonds to UK citizens and give the proceeds to other UK citizens to spend. But if all they can spend it on is the total value of UK output, that pie is shrinking. More money from borrowing would only raise prices, that is, add to inflation.


Total UK consumption can exceed the value of UK output only if the extra is imported. Because the imports are paid for in another currency, borrowing to pay for those imports must be borrowing from foreign sources. The debt (public and private) that the UK owes others must rise by the value of the excess consumption.


However, consuming more today by adding to our overseas debt isn’t a miracle cure.


• Not everything can be imported. Domestic services of all types are provided, well, domestically. GP visits and houses and hotel rooms and haircuts will cost more as a result of wage inflation, no matter the amount of net foreign borrowing. These price increases will continue to provide some impetus to a wage/price spiral and make it more likely that the Bank of England will end up pushing the economy into recession to stop it.


• The problem with debt is that you have to pay it back, and in the meantime, you pay interest on it. More consumption today means surrendering a greater amount of potential consumption in the future. Only if there is strong UK productivity growth will this foreign debt repayment not cause significant future trouble. Sadly, the UK has lagged in productivity growth among advanced economies for many years.


Cure Part 2: A More Productive Economy



The policy most likely to maintain social cohesion in the near term, and greater prosperity in the longer term, is a tricky two-step. We need to borrow to defend most people’s consumption in the next year or two, but then switch the budget to support growth and productivity-enhancing investment. Unless we do this, our debt repayment obligations will grow to unmanageable levels and meanwhile our level of consumption will continue to shrink relative to that of our peers.


Our political system has not been good at tricky two-steps. It can manage short-term stimulus, funded by debt. But for decades the UK has failed to invest sufficiently in physical, technological and human capital to create productivity comparable to our peers. The inflation crisis is a call to action. Not only to mitigate current deterioration in living standards but to build a modern economy that sustains rising living standards into the future.

You might also like...

Check out some other posts from Aston University

3 min

New Aston University spin-out company will develop novel ways to treat non-healing wounds

EVolution Therapeutics (EVo) has been founded on the work of Professor Andrew Devitt into the causes of inflammatory disease A failure to control inflammation in the body, usually a natural defence mechanism, can cause chronic inflammation, such as non-healing wounds Non-healing wounds cost the NHS £5.6bn annually, so there is a vital need for new treatments. Aston University’s Professor Andrew Devitt, Dr Ivana Milic and Dr James Gavin have launched a new spin-out company to develop revolutionary treatments to treat chronic inflammation in patients. One of the most common inflammatory conditions is non-healing wounds, such as diabetic foot ulcers, which cost the NHS £5.6bn annually, the same cost as managing obesity. Such wounds are generally just dressed, but clinicians say there is a vital need for active wound treatments, rather than passive management. The spin-out, Evolution Therapeutics (EVo), will aim to create these vital active treatments. Inflammation in the human body helps to fight infection and repair damage following injury and occurs when the immune system floods the area with immune cells. Normally, this inflammation subsides as the damage heals, with the immune system signalling to the immune cells to leave. However, in some cases, the usual healing mechanism is not triggered and the inflammatory response is not turned off, leading to chronic inflammation and so-called inflammatory diseases. EVo is based on Professor Devitt’s work on dying cells in the body, known as apoptotic cells, and how they contribute to health. Dying cells release small, membrane-enclosed fragments called extracellular vesicles (EVs), which alert the immune system to the death of cells, and then trigger the body’s natural repair mechanism and remove the dead cells. It is estimated that 1m cells die every second. Professor Devitt and his team have identified the molecules within the EVs which control the healing process and are engineering new EVs loaded with novel healing enzymes, to drive the body’s repair responses to actively heal wounds. Much of the research has been funded by the Biotechnology and Biological Sciences Research Council (BBSRC) with additional support from the Dunhill Medical Trust. Professor Devitt, Dr Milic and Dr Gavin received Innovation-to-Commercialisation of University Research (ICURe) follow-on funding of £284,000 to develop the vesicle-based therapy with EVo. Most recently, in December 2023, Professor Devitt and Dr Milic were awarded £585,000 from the BBSRC Super Follow-on-Fund to develop engineered cells as a source of membrane vesicles carrying inflammation controlling cargo. The team, together with Professor Paul Topham, also received funding from the National Engineering Biology Programme (£237,000) to support polymer delivery systems for vesicles. EVo is one of the 12 projects being supported by SPARK The Midlands, a network which aims to bridge the gap between medical research discoveries of novel therapeutics, medical devices and diagnostics, and real-world clinical use. SPARK The Midlands is hosted at Aston University, supported by the West Midlands Health Tech Innovation Accelerator (WMHTIA), and was launched at an event on 31 January 2024. Professor Devitt, EVo chief technical officer, said: “Inflammation is the major driver of almost all disease with a huge contribution to those unwelcome consequences of ageing. We are now at a most exciting time in our science where we can harness all the learning from our research to develop targeted and active therapies for these chronic inflammatory conditions.” Dr Gavin, EVo CEO, said: “The chronic inflammation that results in non-healing wounds are a huge health burden to individuals affecting quality of life as we age but also to the economy. Our approach at EVo is to target the burden of non-healing wounds directly to provide completely novel approaches to wound care treatment. By developing a therapy which actively accelerates wound healing, we hope to drastically improve quality of life for patients, whilst reducing the high cost attached to long term treatment for healthcare systems worldwide.”

4 min

“Females are not autistic enough”: Aston University academic hosts talk on new book exploring female autism

Professor Gina Rippon signs a copy of The Lost Girls of Autism for talk attendee Dr Georgie Agar Professor Gina Rippon’s new book, The Lost Girls of Autism, investigates why autism was thought to be a male condition for so long She gave a public talk at Aston University on 6 May 2025 exploring the central themes of the book Women and girls with autism have long been overlooked as they are better at masking and camouflaging so ‘fail’ standard tests. Autism in women and girls has been overlooked for decades, and Gina Rippon, professor emeritus of cognitive neuroimaging at Aston University Institute of Health and Neurodevelopment (IHN), has given a talk about her new book on the topic at Aston University. The book, The Lost Girls of Autism, was released on 3 April 2025, coinciding with Autism Acceptance Month, with the subtitle ‘How Science Failed Autistic Women and the New Research that’s Changing the Story’. Autism is characterised by a number of now well-known traits, including social awkwardness, extreme obsessions, and unusual movements and coping mechanisms known as ‘stimming’. It was (allegedly) first described in the 1940s separately by Austrian psychiatrists Leo Kanner and Hans Asperger. Originally identified as a rare developmental condition, since the 1980s, there has been an 800% increase in diagnoses, leading to concerns about an ‘autism epidemic’. There is a strong and enduring belief that it is a condition much more prevalent in males. Professor Rippon described her research as “looking at how brains get to be different and what that means for the owners of those brains”. This includes looking at the functions of different areas of the brain using scanners. During research into a number of brain conditions and diseases with obvious differences between the sexes, including how the disease progresses, such as Alzheimer’s in women, or prevalence in one particular sex, such as Parkinson’s in men, Professor Rippon also became interested in autism, also assumed to be largely a condition in males. However, during a research review, she found that many autism studies made no reference to sex differences. Amalgamated data from autism studies found that 80% of participants were male, and 25% of testing centres only tested males with autism. By only looking at males, Professor Rippon explained, the notion that autism is a male disorder became self-fulfilling. This does not just refer to scientific research. Even now, boys are ten times more likely to be referred for assessment for autism and twice as likely to be diagnosed than girls, even when they have exactly the same traits. 80% of autistic females have received multiple wrong diagnoses, including borderline personality disorder, social anxiety or obsessive-compulsive disorder (OCD). But why? The reason is the unchallenged belief that ‘autism is a “boy” thing’ causing a male spotlight problem in all aspects of the autism story. It could also be that females with autism express the condition differently. Professor Rippon said: “This took me back to [my previous book] The Gendered Brain when I was looking at the very clear view of what males should be like and what females should be like. If you look at the autistic population you have this clear idea that males are like this, but females, er, not so much? Females have poor social skills, but not as poor, or obsessive interests, but not as obsessive, so the trouble with females, is that they are not autistic enough.” The gold standard tests for autism are the Autism Diagnostic Observation Schedule (ADOS) and the Autism Diagnostic Interview (ADI) tests. Professor Rippon believes these are heavily biased towards how the condition manifests itself in males, such as social awkwardness or extreme obsessions. For example, parents may well be asked if their son has an unusual interest in weather patterns or train timetables, but they are not asked if their daughter has an unusual interest in Barbie dolls, because dolls are seen as socially acceptable. Research has shown that females with autism are more likely to ‘camouflage’ their symptoms, watching how ‘normal people’ behave, even practising social interactions, so they appear more normal. They are also more likely to ‘mask’ symptoms behind a persona, such as the ‘class clown’ or ‘star athlete’, in an effort to fit in. Autistic females describe this behaviour as a ‘survival strategy’ to avoid being spotted as different. It is also the case that girls are more likely to have sensory processing problems, such as aversion to strong smells, which can be enough to affect their day-to-day lives. This has only recently been added to the diagnostic criteria for autism. If the camouflaging or masking collapses, rates of other conditions such as disordered eating or anorexia, self-harm and gender dysphoria are disproportionately high, and it is these which will become identified as the underlying difficulty, rather than autism itself. Professor Rippon said: “The next stage should be asking why this group of individuals persists in hiding their autism, especially when autism has been defined as a lack of interest in social connection. There’s what I call the ‘born to be mild’ effect, where little girls are trained to socialise more, to behave, not to make a fuss, if you feel uncomfortable, don’t tell anyone else about it. There’s a lovely comment from one late-diagnosed female who rues the fact that she was so well behaved and wishes that she had just burned more cars so that someone would have spotted her carefully camouflaged distress!” The final slide in the presentation covered what Professor Rippon called “an ironic footnote”. While Leo Kanner and Hans Asperger are described as the fathers of autism, writing in the 1940s, it was in fact a Soviet female psychiatrist, Grunya Sukhareva, writing in the 1920s, who first described autism, even clearly examining the differences in the condition between boys and girls. Why her research was ignored for so long is unclear, but the male spotlight problem may well have been avoided. For more information about The Lost Girls of Autism, visit https://www.panmacmillan.com/authors/gina-rippon/the-lost-girls-of-autism/9781035011629.

4 min

Aston University researcher to help uncover hidden impact of painkiller overuse among older people

The HOPE-AO project led by the University of Plymouth will look at the potential harms of overprescribed pain medication in older people in the UK Aston University’s Professor Ian Maidment will bring his expertise in pharmacy and work with patient groups on medicine optimisation The project has been funded by the National Institute for Health and Care Research (NIHR) A new study led by the University of Plymouth will explore chronic pain prescribing in older adults across the UK, with the aim of understanding whether current treatments and processes meet their needs. The HOPE-AO: Helping to Optimise Pain control in the Elderly experiencing Analgesic Overprescribing project is being supported by the National Institute for Health and Care Research (NIHR) and includes Aston University’s Professor Ian Maidment. It will investigate whether certain groups of the older population are more likely to have analgesic (pain relief) medication overprescribed to them, and any side effects or other harms these medications can pose if taken for long periods. It aims to identify alternative treatment solutions to reduce the use of unnecessary pain medicines, working with patients to develop a list of acceptable strategies that could be tested and implemented across the UK. Around 4m older people across the UK live with varying degrees of chronic pain as a result of conditions including arthritis, diabetes or frailty. While some people benefit from pain relief medicines, many end up receiving long-term repeated prescriptions – for medications ranging from paracetamol and ibuprofen to opioids and antidepressants – for weeks, months or years at a time. The project is being led by researchers from the University of Plymouth, working with colleagues at the University of Exeter, Aston University, University of Aberdeen and the North East London Foundation NHS Trust. It is funded by through a Programme Development Grant from the National Institute for Health and Care Research (NIHR). The project team comprises experts in the care of older people – including healthcare researchers, nurses, consultants, GPs, pharmacists and psychiatrists working across the UK – as well as medical statisticians and health economists. It also involves an advisory group of patients with lived experience of receiving repeat prescriptions for pain medication. During the project, the team will speak to patients aged 65 and over with a history of chronic pain for which they are taking, or have taken, medication and families who cared for and supported relatives with chronic pain. They will also speak to healthcare professionals who are either prescribing or supporting older adults taking medication for chronic pain management. Alongside this work, the team will analyse anonymised healthcare data to understand more about older adults who are prescribed medication for chronic pain. This includes patterns in prescribing, health and demographic factors associated with pain medication use, and potential health outcomes, and will help identify those likely to benefit most from support. Professor Maidment, from Aston Pharmacy School, will bring his expertise in pharmacy, medication use in day-to-day clinical practice and working with diverse groups of patients to support medication optimisation. He said: “From my experience in community pharmacy, the use of pain medicines is very common in older people. We need to work with older people to understand how we can help older people to use other potentially safer approaches.” Patricia Schofield, professor of clinical nursing at the University of Plymouth and one of the study’s chief investigators, said: “Very often, older people are told by a doctor that the most effective means of treating a health condition is through some form of pain relief. But they often don’t get any form of follow-up appointment and, as a generation, are less likely to seek one as they either feel pain is part of the ageing process or they don’t wish to be seen as a burden. The result is that they end up getting repeat prescriptions, potentially for pain medications they no longer need and also at significant cost to the NHS. “This study will give us a clearer understanding of the scale of the issue which we can use to develop ways of benefitting patients and their families, and the healthcare professionals working to treat and support them.” Victoria Abbott-Fleming MBE, founder of the charity Burning Nights CRPS Support, is the chair of the Patient and Public Involvement and Engagement group for the HOPE-AO study. It will be made up of several adults over the age of 65 who live with chronic pain and have received repeat prescriptions for pain medication. Victoria has herself lived for more than 20 years with a chronic pain condition, Complex Regional Pain Syndrome (CRPS), and set up Burning Nights to support those affected by it on a day-to-day basis and their families. She is also chair of the Expert Patient and Carer Committee at the British Pain Society. She said: “I’m excited to support this study that places the voices of older adults and their carers at the heart of pain management. All too often, those living with chronic pain – especially older adults – are prescribed medication without regular review or consideration of alternative approaches. This study is a vital step towards more informed and balanced care, helping ensure that older people living with chronic pain are not just treated, but truly heard and supported.”

View all posts
Powered by