Warning: Inflation Could Take British Politics to a Really Dark Place | Jonathan Freedland

wInter is coming The Bank of England says it. Choose your measure of the economic storm that is heading this way, aggravating a shiver that is already stinging hard. The Bank says inflation will reach 13%, reducing the value of wages, making everything more expensive, starting with eating and heating, forcing even more people to decide whether to starve or tremble. We must prepare for a recession that will see five consecutive quarters of contraction and a decline in household incomes of 5% by 2024, the largest decline since records began more than half a century ago. Of course, all of this will hit those who have the least hardest. By 2024, one in five households in the UK will have no more savings. Meanwhile, inflation is 30% higher in the towns and cities of northern England, thanks, He says the Center for Cities, the bad domestic isolation and the “car addiction” that forces people to shell out more gasoline.

You don’t have to be a strict old-school economic materialist to know that all of this will shape our politics, in both profound and superficial ways. It begins with the latter and the current competition to choose the next British Prime Minister, an anointing process mysteriously delegated to a select presbyter of some 100,000 Britons who are far from representative of the country whose fate they hold in their hands.

By right, the Conservative party leadership race should be shattered by the Threadneedle Street warning, although obviously the two contenders hardly needed Thursday’s predictions to know that the UK is already in a severe cost-of-living crisis. . Liz Truss and Rishi Sunak should prepare themselves and their group for the extremely difficult task one of them will have to tackle in less than a month. But is not so.

Instead, Truss continues to make relaxing, imaginative speeches about tax cuts, even as he splashes the money, with promises to spend on everything from defense to doctors’ pensions – cakeism’s most famous exponent may be in his final days as Primo. Minister, but your doctrine survives up in Truss. Sunak likes to pretend to be Mr. Sensible, insisting that immediate tax cuts would simply “put fuel on the fire” of inflation, but he’s committed to his own form of pimping politics, telling the conservative recruiter whatever nonsense they want. feel.

Unfortunately for him, we now have video evidence of how low he is poised to sink into that feat – and how far right he actually is. In a pretty garden in Tunbridge Wells, he boasted to the local Tories of his efforts as chancellor to reverse the Treasury’s formulas “which pushed all funding to deprived urban areas” rather than to more deserving communities like theirs. That’s right: it’s Tunbridge Wells who needs the help.

Rishi Sunak admits taking money from underprivileged areas in leaked footage – video

At the national level, surely, it will be another story. You would think that no ruling party presiding over an economic cataclysm of this order could hope to be re-elected. Unbridled inflation, impending recession, rising mortgages, falling incomes – every political textbook says these are the circumstances under which incumbents are beaten by voters. Keir Starmer should be way ahead of the conservative alternative, whoever he is. Yet he looks at the Thursday poll this showed that, in a game of Starmer v Truss, it is Truss who is leading by two points. The work is leading in other polls, of course, but given this climate it should be out of sight.

However, with an economic shock of this order the impact will be felt far beyond Westminster and electoral politics. Deep in Western popular memory is knowledge of where hyperinflation can lead – Berlin wheelbarrows filled with worthless banknotes as Hitler’s precursors – but what about a sharp rise in inflation that is not at that Weimar level. , but is it an increase all the same? What will this do to our policy?

A quick consequence could be a change in public attitudes towards the war in Ukraine. The most obvious cause of the current surge in inflation is rising oil and gas prices partly triggered by the Russian invasion. Staying with Kiev and sanctioning Moscow had a cost paid by ordinary people on the square and in the heating bills. So far, the British, along with most Europeans and Americans, have been admirably solid in their support for the victims of Putin’s aggression. But as inflation bites harder, that could change, with new pressure on Kiev to yield to its tormentor, if that’s what it takes to bring prices down.

Public discontent can find another outlet. The first signs are emerging of the kind of disobedience movement that welcomed the election tax in 1990, with a Don’t Pay campaign urging consumers to refuse to pay their energy bills until companies lower their prices. Energy retailers will point out that they are not the same as energy extractors like BP, which this week announced it had tripled its quarterly profits to £ 7 billion, but few will be in the mood to make that distinction.

An increase in inflation of this order travels across the class lines. Workers struggle, because a runaway inflation rate also turns a wage increase into a cut. The middle classes, meanwhile, see their savings shrink before their very eyes. If they are homeowners, their mortgage bills will skyrocket, potentially out of reach. And when the houses start to be restored, fear turns to fury.

Where does that anger go? Readers of the Guardian may hope that it is directed at the act of self-harm that has made our current problems worse. I asked Albrecht Ritschl, professor of economic history at LSE, what single move the UK government could make to alleviate the pain. “Suspend Brexit for 20 years” was the answer. He knows it won’t happen. But he explains that today’s crisis is not a crisis of demand, but of supply: there is simply not enough material to meet the demand, also thanks to the post-Covid blockages in the global supply chain. In Britain, the situation is exacerbated because we can no longer import European goods as freely or as cheaply as before.

In this context, politicians are left with a question of distribution: how to divide the finite, indeed diminishing, amount we have. The priority must surely be those who simply cannot afford to live: restoring the £ 20 increase in universal credit would be a start. But, says Ritschl, “if you want to give something to the poor, then you have to do it like Robin Hood – and take from the rich.” In other words, he promises not the Truss tax cut, but the tax increase on the richest.

A wealth tax, increased benefits, and a rethink about Brexit – there would be some comfort in imagining those as the consequences of this crisis. But I wouldn’t hold my breath. Conversely, memories stir of the last rise in inflation, in the 1970s. That decade brought a wave of political violence and an increase in support for the racist far right, in the form of the National Front.

Under Boris Johnson, the Conservative Party has shifted towards a nationalist populism that Truss seems unlikely to eliminate. That creed is already a bad hue, but it could darken, especially when winter comes.

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