Real Interest

The pamphlet Real Interest proposes the inflation indexation of interest earned and interest paid. It was seen in 1992 as an alternative to the disastrous European Exchange Rate Mechanism from which the UK had been expelled. If implemented borrowers and investors would pay the real cost of capital thus encouraging only value added investments. Savers would be rewarded by not being taxed on the inflation element of their “interest”. Government would lose taxation on interest earned but gain on the lower allowance for interest paid. Companies and individuals would gain by big gains in interest cash payments.