Lessons of Thatcher

SIR – Inflation is caused by too much money chasing too few goods and services.

Taming it must be the top priority, otherwise it will undermine every other aspect of good economic management. With interest rates at historically low levels following the 2008 financial crash, huge money injections into the economy in response to the pandemic, and supply-chain disruptions (caused not least by Covid and the war in Ukraine, it is unsurprising inflation is rampant.

The hard-won lessons of the Thatcher era were as follows: the interest rate is the primary tool for keeping inflation at bay, by controlling the money supply to provide conditions for sustainable economic growth; the purpose of taxation is to fund essential public services, not to serve as an ineffective instrument for demand management; and excessive taxation dampens economic growth.

Some seem to be trying to argue this in reverse: use low interest rates to support growth and high taxes to control inflation. It is time to get back to the seemingly forgotten basics.

Edward Hill

Chandlers Ford, Hampshire

SIR – The outcome of the Conservative leadership contest seems to hinge on who is most likely to deliver a win in the next general election.

This means that long-term strategies, which may need to be radical and unpopular, are sacrificed for popular short-term measures.

Thanks to the failure of successive governments to look more than a few years ahead, Britain is in a worse position than it could have been with respect to pandemic planning, energy security and cost, water supply, food security, healthcare and social care.

It is time for politicians to act in the long-term interests of the country.

Jos Binns

Camerton, Somerset