CHANCELLOR Jeremy Hunt echoes governments across the Western world when he blames Russia’s invasion of Ukraine for dismal economic performance and falling household spending.
“No country is immune” to the inflationary pressures caused by the war, he pleads — “least of all Britain.”
His last words are less an excuse than an admission of guilt. Hunt is right. Britain has proved “least of all” able — or willing — to protect its people from the impact of rising prices, and the reasons are not down to some quirk of the national character but because of economic policies followed by this government and its predecessors over many years.
Nobody would deny that the invasion of Ukraine, combined with the sanctions imposed by the US and EU in response, has sharply accelerated price inflation, particularly of energy and food. Russia is a major energy exporter; Russia and Ukraine were both major food exporters.
But as the National Education Union general secretary Kevin Courtney has pointed out, war was like the loud noise that prompts an avalanche that couldn’t take place if the snows hadn’t built up first.
We would not be in this crisis without the build-up: the long years of anaemic wage growth or real-terms cuts.
The average worker in this country is poorer than they were when the bankers crashed the economy 15 years ago: and for 12 of those years the Conservatives have been in charge.
Pay was lagging behind GDP growth even when the economy was growing, which gives the lie to the idea that some vague “economic outlook” can be blamed for the pressure on households.
The Tories are the party of low pay: they have held wages down for more than a decade and it is their determination to force pay down again which is responsible for escalating industrial action across the public sector, as well as in privately operated industries under effective government control, like the railways.
But it is not just on wages that we are paying the price of economic choices made by our ruling class.
British energy prices are now the highest in the world. Once again we have proved “least of all” immune to global inflationary trends.
Why? Well, energy-sector unions like GMB were warning five years ago that shutting major gas storage facilities like that at Rough in Yorkshire would leave us exceptionally vulnerable to supply chain fluctuations.
In October British Gas owner Centrica noted that we have reserves adequate to keep gas flowing for just nine days in Britain — compared to 89 days in Germany, 103 days in France or 123 days in the Netherlands.
The “just-in-time” supply model means any blip in supply, any sudden surge in price, hits Britain faster and harder than anyone else. Unrivalled energy price inflation is down to an irresponsible, privately owned energy network more concerned with instant dividends than energy security.
Analogous processes expose us to soaring food prices. Britain does not produce enough of its food, again a consequence of the near total absence of economic planning from government policy over decades.
Rising energy costs and an avian flu epidemic have played their part in sending food costs sky-high: but like the war in Ukraine, these are not once-in-a-blue-moon catastrophes we can put down to bad luck.
Global warming is with us, causing crop failure and desertification on a growing scale. Industrialised agriculture makes deadly epidemics more rather than less likely. And government policy as it stands makes it more likely the Ukraine war will spread than come to an end any time soon.
We must challenge the policies that are bringing our world to the edge of system breakdown. And we must abandon a laissez-faire, leave-it-to-the-market ideology that provides no defence whatever against shocks that are going to keep coming.
