The country’s economy is very different from the bleak days of the ’70s, but some similarities are troubling Britons and looming as a potential headache for Prime Minister Boris Johnson.
LONDON – Long lines at gas stations, rising fuel prices, empty shelves in supermarkets and runaway inflation worries.
Britons emerge from 18 months of pandemic-imposed hibernation only to find that their country faces many of the same hardships as in the 1970s. There’s nothing like Austin Powers about this time machine: the seventies, by all accounts, were some of the darkest days since Britain, in contrast to the swinging sixties; Even the thought of his return is enough to make the leaders of the present government shudder.
The sudden burst of doom in Britain is at least as rooted in psychology as it is in economics. While there is no question that the country is facing a confluence of problems – some caused by the pandemic, others by Brexit – experts said it was too soon to predict that Britain would face the economic turmoil and political turmoil that characterized that decade. was leading.
“It’s a combination of things that, in theory, can go on, but are pretty much alive in their own right,” said Jonathan Portes, professor of economics at King’s College London. “We always talk about the 1970s, but it’s half a century later, and all kinds of things are different.”
He said the UK economy had recovered from the pandemic faster than many experts had predicted. The shortage of labor and some goods is a fleeting effect of reopening much of the economy after a prolonged lockdown. Rising wages and supply constraints are driving up the inflation rate, while fuel shortages have closed dozens of gas stations, reflecting a shortage of truckers, not just energy supplies.
Nor does Britain have an old industrial base and powerful unions in the 1970s. In 1979, Labor unrest crippled a Conservative prime minister, Edward Heath, and one of his Labor Party successors, James Callaghan, after what tabloids called a winter of discontent.
And yet the similarities are suggestive enough that the right-wing Daily Mail warned on Thursday that “Britain is facing a winter” – a cold welcome for Prime Minister Boris Johnson as he returned from the United States, A new submarine coalition celebrated and rallied the country ahead of the United Nations Climate Change Conference in Scotland in November.
“It’s a very easy ghost to resurrect,” said Kim Darroch, a former British ambassador to Washington who now sits in the House of Lords. “But these are real problems. You can just see this perfect storm coming.”
The risks for Mr Johnson are acute, not least because his government recently announced plans to raise taxes, breaking a campaign pledge, to replenish the country’s social care network. The combination of high taxes and rising costs for energy bills and grocery stores will put pressure on Britons at the very moment they are finally enjoying life without most lockdown restrictions.
For the opposition Labor Party, which struggled to attack the government amid the pandemic-induced national solidarity, killing the Tories at the high cost of living is an easy tactic. Some analysts have predicted a series of outrageous reversals for Mr Johnson, triggered by potential repercussions from a tax hike.
Tony Travers, a professor of politics at the London School of Economics, said, “When articles are written in the Conservative paper about a return to the seventies, it is a bright red signal for a Conservative government.” He referred to a proverb in British politics: “Oppositions do not win elections; Governments lose them. “
The fear of fuel shortage was most visible on Friday. In London, long lines formed at some gas stations, although others reported operating normally. Priya Della, a cashier at a busy Texaco station in West Norwood in south-east London, said her station could run out of fuel by the end of the day.
Ragu Thangavel, a manager at an Esso station in Brighton, said by Friday morning he had already run out of diesel and expected to run out of all fuel by evening. “There have been long queues since this morning,” he said, adding that he was not told when his next delivery would arrive.
Oil giant BP said many of its stations had closed due to a shortage of unleaded and diesel-grade fuel. Tesco, a supermarket chain that operates gas stations, said it had faced temporary closures in a small number of areas. Gordon Balmer, executive director of the Petrol Retailers Association, said the problem is not the supply of fuel, but the lack of trained truck drivers to transport it.
The challenge of finding and paying qualified drivers cuts across all areas beyond fuel. With drivers retiring and delays in getting licenses due to the pandemic, the labor pool has shrunk despite increased demand. Due to which wages have increased. Tom Binks, managing director of Peter Green Childs, a refrigerated and frozen food transport company, said he had to increase wages by 35 percent from April to keep about 60 drivers in his fleet.
To pay for this, Mr Binks said he has raised his rates for food suppliers for transportation services. Suppliers pass the higher costs on to retailers, who in turn pass them on to customers. “Eventually, food will become very expensive for common people,” he said. “It’s simply inevitable.”
Brexit has exacerbated the labor shortage. An estimated 200,000 EU citizens left Britain during the pandemic, and have not returned to work in the country in part due to more stringent visa requirements, which began this year. This means that companies can no longer easily fill vacant positions with foreign employees.
The Road Haulage Association estimates there is a shortage of 100,000 drivers, of whom 20,000 or so are drivers who have left the UK. While the government has increased the number of hours drivers work per day and has accelerated the process of obtaining licenses, it has so far resisted pressure to ease visa rules – instead increasing pay and companies allowing British drivers Looking forward to training.
A shortage of truck drivers has turned into a supply-chain crisis that has left restaurants struggling with empty shelves to buy essential ingredients for their menus and supermarkets. Panic shopping exaggerated fears, according to a recent survey by the National Statistical Agency, but more than half of British adults report their food purchases to be inflated.
Supply constraints are threatening that there has been a much stronger recovery from the pandemic. On Thursday, the Bank of England said it was again reducing its forecast for economic growth for the third quarter, this time by 1 percentage point. Inflation could exceed four percent by Christmas.
All of this has left businesses on a knife’s edge: balancing optimism that the pandemic is ending with panic about the strength of a recovery.
Coffee and sandwich chain Pret a Manger announced this week that it plans to open 200 new stores and hire 3,000 more over the next two years. But in the face of acute shortage of workers in the hospitality industry, it has had to increase the salary by 5 per cent.
“We are still not clear how the recovery will take place,” said Prat’s chief executive, Pano Cristo. “I think we’re still recovering, it’s a positive improvement, but we’re still recovering.”
For consumers, the pressure is only likely to increase. The government’s furlough programme, which compensated for up to 80 per cent of wages lost due to the pandemic, ends at the end of this month. Soon after, cuts to Universal Credit, a major government benefits programme, would cost more than five million people £20 a week. And the cap on household energy bills, which protects about 1.5 million Britons, will be increased by 12 percent.
“Families are going to feel completely squeezed,” said Carl Handscomb, an economist at the Resolution Foundation, a research group that studies living standards. “It’s going to feel uncomfortable, and people are really going to get worse.”
Stanley Reid contributed reporting from London.