wooInter is coming. The Bank of England says so. Choose your measure of the economic storm that is moving like this, deepening a cold that is already hitting hard. Bank says inflation will reach 13%, shrinking the value of wages, making everything more expensive, beginning cooking and heatingforcing more people to decide what to do Hungry or shivering. We have to prepare for a recession that will see five consecutive quarters of contraction, and a 5% drop in household income by 2024 – the biggest drop since records began more than half a century ago. Of course, all of this will affect the people with the least. One in five UK families will be abandoned no savings Absolutely by 2024. Meanwhile, inflation is 30% higher in towns and cities in northern England, thanks to They say Central to cities, poor home insulation and a “car dependency” force people to spend more on petrol.
You don’t have to be a strict economic materialist of the old school to know that all of this will shape our politics both deep and shallow. Begin with the latter and the current competition to choose Britain’s next prime minister, a process of consecration mysteriously assigned to the 100,000 or so Britons’ select priests who are anything other than the country’s representative whose fate are in their hands.
By rights, the Conservative Party leadership race should be understood by Threadneedle Street’s warning, although of course the two contenders hardly need Thursday’s forecast to know that the UK is already in dire cost of life crisis. Is. Liz Truss and Rishi Sunak They must prepare themselves and their party for the extremely difficult task that one of them will face in less than a month. but it’s not like that.
Instead, the truss continues to make the pleasurable hypothetical talk of tax cuts, even as splashes cash, with a promise to spend on everything from defense to doctors’ pensions: Kekism’s most famous exponent may be in his last days as PM, but his theory remains in truce. Sunak prefers to pose as Mr Sensible, emphasizing that immediate tax cuts are only “put fuel on the fireof inflation, but he’s engaged in pander politics in his own right, telling the Tory selector whatever nonsense they want to hear.
Unfortunately for him, we now have video proof of just how much he’s prepared to sink down into that effort—and how right-wing he really is. In a beautiful garden in Tunbridge Wells, she Claim His efforts as chancellor led local Tories to reverse Treasury formulas “which pushed all wealth into disadvantaged urban areas” rather than to more deserving communities like him. That’s right: It’s Tunbridge Wells who needs help.
At the national level, of course, it will be a different story. You would think that no governing party presiding over the economic devastation of this order can expect to be re-elected. Runaway inflation, impending recession, mortgages, dwindling incomes: every political handbook says these are situations in which voters are surrounded by voters. The Keir starrer should be miles ahead of the conservative choice, no matter what. and still look Thursday Voting This showed that, in the match of Starmer vs Truss, it is Truss who is ahead by two points. Of course, Labor is at the fore in the second survey, but given this environment, it should be out of sight.
Nevertheless, the effects of an economic shock of this order would be felt far beyond Westminster and electoral politics. Deep in Western folk memory is the knowledge of where hyper-inflation can lead – Berlin wheelbarrows full of worthless banknotes as Hitler’s precursor – but what about a sharp increase in inflation that is not at that Weimar level, but Is growth the same in all? What will happen to our politics with this?
A sharp consequence could be a change in public attitudes towards the war in Ukraine. The most obvious reason for the current inflation increase is the rise in oil and gas prices due to the Russian invasion. Standing with Kyiv and sanctioning Moscow has come at a cost paid by regulars on the forecourt and their heating bills. So far, Britons, along with most Europeans and Americans, have been admirably solid in supporting the victims of Putin’s aggression. But as inflation hardens, that could change, with new pressure on Kyiv to give way to its suffering, if it has to do so to get prices back.
Public dissatisfaction can find another way. The first signs of the kind of defiance movement that welcomed the poll tax in the 1990s are emerging, including a do not pay campaign Urged consumers to refuse to settle their energy bills until companies reduce their prices. Energy retailers will insist they are not the same as energy extractors like BP, which announced this week that it had tripled its quarterly profits. £7bnBut few will be in the mood to make up that difference.
Inflation growth of this sequence travels in square lines. Working people struggle, because a galloping inflation rate turns even a wage increase into a cut. Meanwhile, the middle class is watching any savings shrink before their very eyes. If they are homeowners, their mortgage bills will go up, potentially out of reach. And when homes are taken over, fear turns into anger.
Where does that anger go? Guardian readers can hope that it is directed at the act of self-harm that has made our current crisis so much worse. I asked Albrecht RitschlProfessor of Economic History at LSE, what a step the UK government can take to ease the pain. “Suspend Brexit for 20 years,” came the reply. He knows that isn’t going to happen. But he points out that today’s crisis is not of demand, but of supply: Thanks to post-Covid disruptions in the global supply chain, there isn’t enough goods to meet demand. In the UK, this has increased because we can no longer import European goods as freely or as cheaply as before.
In that context, policymakers are left with the question of distribution: how to share the limited, truly shrinking amount we have. Priority must be given to those who simply cannot afford to live: restore £20 raise for Universal Credit There will be a beginning. But, says Ritschel, “if you want to give something to the poor, you have to do it like Robin Hood – and take it from the rich”. In other words, the truss is not promising tax cuts, but tax increases on the wealthiest.
There would be some comfort in imagining them as the consequences of this crisis: a wealth tax, a profit hike and a rethink on Brexit. But I won’t hold your breath. Instead, it evokes memories of the last such inflationary increase in the 1970s. That decade saw an increase in political violence as the National Front and support for right-wing racists increased.
Under Boris Johnson, the Conservative Party has shifted toward a nationalist populism that Truss is unlikely to jail. That creed is already of an ugly hue, but it could be black—especially when winter comes.