Sunday 24 July 2022

The Race to number 10


A fight to the finish, no doubt it will be a bruising contest. Whoever wins this race will come out the loser. Britain is ailing, and none of the arguments put forward by both Rishi Sunak and Liz Truss makes much sense in the long run or stands on enough firm footing to win an election in two years. Britain can not afford a test of time because economically, it is bleeding and fast becoming the sick man of Europe.  

Britain is facing the prospect of reliving the nightmare of the 1970s, when inflation, interest rates, price rises and wages were chasing each other. Fifteen, twenty, or even thirty per cent rise in wages to accommodate price increases. All spiralling out of control. The strong trade unions at the time, trying to protect the standard of living of their members, were indirectly fanning the flames of inflation by asking for higher wages. Today, we have a limited labour supply thanks to Brexit policies of closed borders. The basics of supply and demand plus Social media help to embolden attitudes risking the appeal for higher pay. Then as today, the steep hike in energy cost was partly the reason for this nightmare.   

The two contenders have to deal with an array of problems they would face from day one. Prices in the UK have been rising at their fastest rate for forty years. Lorry drivers were first in the queue for wage increases. Then on Teachers, public sector workers, British Airways, Barristers, Nurses, and more. The central bank faces a balancing act with setting interest rates between applying too much pressure to deal with the prospect of high inflation. The politicians need to deal with the fallout. The cost of money, as well as the cost of all services, food and energy, are picking up. The signs that the country is heading for a recession. The cost of the living crisis must force an incumbent government into action.

Britain faces massive interest payments from debts dealing with the Pandemic. Cutting taxes to protect consumer income at this stage is another debtor finance policy the country can ill afford. Easing the pain in the short term will not make it go away. One of the priorities for the government is to deal with falling output, invest in technology in industry and infrastructure and build prospects for the future. To deal with problems of worker numbers, the taxpayers are declining, dependents on either side, the very young and the old are increasing. The incoming Prime Minister's priority is a need to orchestrate the recovery from the present economic shocks and cut taxes when the country can afford it.
On balance, the chances of the two contestants lie on a knife edge.   Whether Rishi is premiership material remains doubtful. He lacks the charisma and appeal; his knowledge and intellect don't make up for either, perhaps too honest for a politician. Besides, whether Britain is ready for a Brown face occupying number ten is a shot in the dark. Liz portrays herself as a giver by not raising taxes. A populist in the Johnsonian mould is more about style than content. Winning is all that matters; varnishing what matters and hitting all the right notes makes her the darling of the Party's right-wing. In a recent Gallup poll, she is placed way ahead of her opponent in popularity. So take your pick.

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