The G7, G20 and European Union countries have it bad economically, but the UK worse than any of them with its lethal cocktail of rising costs of living and Brexit. Inflation, according to data provided yesterday by the National Statistics Office, rose in the last twelve months to 9.1%, the highest in forty years. To which must be added two consecutive quarters of negative growth, and the imminence of entering a recession.
With a real loss of purchasing power by families since the financial crisis of 2008 and the austerity policy of successive conservative governments, the patience of public sector workers has run out. Those of the railroads paralyzed the country on Tuesday, a second stoppage is scheduled for today, and another one for Tuesday. Apart from the inconveniences for people who cannot move, it is estimated that the losses in the hospitality sector alone will exceed three billion euros. And doctors, nurses, lawyers, postmen and social caretakers also threaten to cease their work if they do not receive salary increases that at least partially offset inflation. The Summer of Discontent 2022 is reminiscent of the winters of discontent of the 1970s and 1980s that opened the doors to Margaret Thatcher's reforms.
The war in Ukraine, with its impact on the distribution of corn, wheat and sunflower oil, is an important factor in the rise in inflation, but not the only one. The Government favors a real estate bubble that has caused the value of housing to rise by 12.4% in the last year, and pensions (retirees are mostly conservative voters that Boris Johnson wants to take care of) increased by 10%, while the Government resists granting salary increases to civil servants.
The inflationary pull is led by food (bread, cereals, meat...) and by energy (it costs an average family 120 euros to fill the car's gas tank and their gas and electricity bill will go up a thousand euros this year), but also housing, transport and clothing are more expensive. The UK statistics are particularly worrying due to the devaluation of the pound sterling, the dismal productivity and the decline in both external and external investment. The model of a service economy driven by the City of London no longer works.
Another element that contributes significantly to inflation is the disappearance of a significant part of the workforce, which after the pandemic has retired or retired, creating vacancies in the market that private sector companies can only cover by offering higher wages. . The Bank of England has raised the base interest rate to 1.25%.