Thomas Cole, Public domain, via Wikimedia CommonsIn a clear sign of our changing climate, last month Italy experienced the highest temperature ever recorded in Europe, hitting a blistering 48.8 degrees in Syracuse, Sicily. It comes just weeks before Boris Johnson, in partnership with the Italians, is due to host the COP26 UN Climate Change Conference in Glasgow.
He will head for Scotland having agreed to water down the Paris climate change goals in exchange for a miniscule trade deal with Australia, and with the prospect of controversial plans for a deep coal mine in Cumbria being approved following a public inquiry. It is hardly an ideal platform from which to urge the US and China to cut their emissions.
However, none of this will be in the PM’s thoughts at the end of October. Urgent matters always taking precedence over important ones in Johnson’s Downing Street, and climate change will pale against a whole series of more immediate issues rapidly converging into a crisis that promises a winter bleaker even than the last one.
Covid cases rising and NHS under pressure
Covid cases, hospitalisations and deaths are all on an ominously upward curve and are expected to continue to rise as schools, colleges and universities reopen after the summer break and cooler autumn weather increases transmission.
In Downing Street there are clearly fears of another winter lockdown, with emergency legal powers being extended last week for a further six months. A government spokesperson said “further steps” will be taken if needed to counter rising covid infection rates across the country.
The NHS is under intense pressure and waiting lists are at a record high with little prospect of the trend reversing and suggestions it may take years to get back to pre-pandemic levels. At the end of July, 5.6 million people were waiting for treatment, the highest number since records began in August 2007.
This is despite health now accounting for 40 percent of government spending, up from 32 percent in 2010, according to Damian Green MP. However generous that may seem, it is far more a reflection of the long squeeze on non-health spending during the austerity years.
Food shortages
Bosses of the grocery chains Tesco and Iceland have both warned of disruption and shortages this Christmas, with Richard Walker the Iceland CEO saying supply-chain chaos is getting worse, adding that his company alone was short of 100 drivers, part of an overall 100,000 shortfall in the UK’s haulage industry.
Supermarkets begin stock building in September to cope with the busy Christmas period, but are finding it difficult this year.
Walker blamed Brexit but said it was a “self-inflicted wound rather than an inevitable consequence of Brexit, caused by the government’s failure to appreciate the importance of HGV drivers and the work they do for us”. Tesco boss John Allan was more restrained suggesting, “there may be some shortages”, but people should not “over-dramatise” and panic-buy.
More red tape due at the end of the month or another delay?
Checks on EU imports were supposed to come into effect at the end of September but already there are rumours that a further delay will be necessary to avoid yet more disruption to food supplies. A delay is a near certainty.
Additional red tape on EU imports was supposed to be introduced in April, all phased in by July. That was delayed because it was thought supplies to the hospitality sector, which was reopening after lockdown, might be under threat.
Industry bosses are said to be expecting an announcement shortly that the date will be pushed back again. If so, it will be confirmation that the government takes the idea of food shortages at Christmas very seriously. Britain apparently gets around two-thirds of its fruit, vegetables and cheese and over half of its wine from the EU.
Tax rises are on the way
The Telegraph reported this week that the latest £12bn increase in National Insurance, breaking a firm Tory manifesto pledge, will push UK tax to levels not seen since the Second World War. We are just beginning to find out how much taxation the UK economy can actually bear in peacetime.
The only alternative to increasing tax rates is to grow the economy, but Andrew Bailey, governor of the bank of England, warned MPs on the treasury select committee this week that severe staff shortages – lorry drivers being just one sector – are holding back Britain’s economic revival. Bailey has begged two million workers to return to the jobs market but a significant number of them are now on the other side of the Channel, with the UK’s post-Brexit immigration policy preventing their return.
His fears were confirmed as the ONS released figures on Friday showing growth stalling with GDP rising by just 0.1 per cent in July despite businesses beginning to reopen. The economy remains 2.1 pre cent smaller than it was in February 2020.
The governor has also developed a ‘concern’ about inflation which is expected to exceed the bank’s target and reach 4 percent later this year. Those of us of a certain age with long memories will know how painful it can be to regain control of runaway inflation.
Sunak’s trilemma
Andrew Levi pointed out on Twitter that Chancellor Rishi Sunak is facing a trilemma. His problem is how to grow the economy by increased spending without risking a prolonged bout of inflation at the same time as Britain’s wealth creators are hobbled by Brexit.
Levi argued that the government can have any two of the following, but not all three at the same time:
- Brexit, Johnson style
- Increased spending to boost the economy
- Control of inflation
You can spend a lot of public money and control inflation, but not with Johnson’s Brexit. Alternatively, you could have Brexit and increase spending, but inflation would quickly take off. You could control inflation and have a hard Brexit, but austerity would have to continue for much longer. You get the problem.
Brexit is taking Britain back to the 1970s in more ways than one. Governments at that time, of both colours, wrestled with these issues on a daily basis – until the International Monetary Fund had to step in and force Denis Healey, a Labour chancellor, to face reality.
Falling exports
New analysis by the Food and Drink Federation has revealed that British food and drink exports to the EU have plummeted by £2bn in the past year, with Brexit blamed for disrupting key supply chains.
Figures from the German Federal Statistics Office seen by Reuters show that we are on course to drop out of the top ten German trading partners for the first time since 1950, with Brexit-related trade barriers said to be driving German companies to look for business elsewhere.
Reuters say in the first six months of 2021, German imports of British goods sank nearly 11 percent year-on-year to €16.1bn.
Imports from the EU also shrank by 11.2 percent (or nearly £1.7bn) in a year, according to the analysis, comparing the first six months of this year with the same period in 2020.
Universal credit is being cut by “catastrophic” £1,000 per year
The government is apparently braced for the “catastrophic” impact of cutting universal credit (UC) by £20 per week, as the temporary boost to Britain’s main welfare benefit introduced at the start of the pandemic comes to an end next month, according to the Financial Times.
The FT report a ‘well-placed Whitehall official’ telling them the government’s own analysis has revealed the deep impact of cutting UC payments. “The internal modelling of ending the UC uplift is catastrophic. Homelessness and poverty are likely to rise, and food banks usage will soar. It could be the real disaster of the autumn.”
An anonymous minister warns that the political backlash over UC, a benefit paid to 6m people, was likely to be more serious for Prime Minister Johnson than the debate about social care.
“There’s no doubt that this is going to have a serious impact on thousands of people and colleagues are really worried, I think it will definitely eclipse social care as a political problem. It’s not just red wall MPs who are fearing a major backlash from the public.”
The furlough scheme ends on 30 September
Unless the chancellor has a change of heart, the furlough scheme that was introduced in March 2020 as a short-term measure to help employers pay staff during the pandemic, will come to an end this month.
Originally due to last for three months, it has been extended several times as lockdowns and restrictions were reimposed. Some 1.6 million employees are still being supported under the scheme.
There are plenty of vacancies to be filled in the jobs market, but many struggling companies may find it difficult to continue.
Migrant crisis
Home Secretary Priti Patel is struggling to contain a rising tide of migrants crossing the English Channel. In August, a record 800 found their way to our shores but this may have been surpassed last Monday when Sky News reported at least 1,000 men, women and children were spotted making the perilous journey from France.
Patel is involved in a diplomatic row with the French, after plans were announced to intercept and turn back flimsy and overloaded migrant boats mid-channel. Relations with France are said to be at a new low as the UK was accused of breaking maritime law and of “blackmail”, after the government threatened to withhold funds for France to increase coastal patrols.
So far in 2021, over 12,500 people are known to have made the trip compared to 8,400 for the whole of last year, making a mockery of Brexit allowing the government to take back control of Britain’s borders.
The DUP threaten to walk out of the power-sharing arrangements
Although Lord Frost has extended indefinitely the grace period for GB-NI border checks without sparking more EU legal action, he has only temporarily postponed the issue. Sir Jeffrey Donaldson, leader of the Democratic Unionist Party (DUP) has threatened to collapse Stormont’s power-sharing executive “within weeks” unless changes to the Norther Ireland Protocol are delivered.
He also said the DUP would withdraw immediately from the cross-border political institutions established under the Good Friday Agreement. DUP ministers will “seek to block additional checks at the ports” when the ongoing and indefinitely extended grace periods end. This is just another of Lord Frost’s ‘rolling crises’.
Nicola Sturgeon announces more work on Indyref 2
Scotland’s first minister Nicola Sturgeon has announced that officials will begin to work again on a detailed prospectus for Scottish independence with a referendum being held before the end of 2023. She wants to hold a vote when the covid crisis has passed, but said that “covid permitting” it would be in the first half of the parliamentary term.
Ms Sturgeon said: “Our democratic mandate to allow people, not politicians, to decide the country’s future is beyond question.”
If a second referendum achieves a majority, something the Scottish National Party has dreamed of since it was formed in 1934, it will spell the end of the United Kingdom itself.
Is an energy crisis on the way?
The usually supportive Daily Telegraph claims an energy shock “cannot be ruled out” and says Britain is “in the grip of a natural gas crunch”.
It follows a spike in wholesale gas prices which have apparently jumped fivefold in the last two years. Prices in the UK rose above 100p a therm in July, the highest level for 15 years, and last week hit an all-time high of 135p per therm. Millions of households rely on gas for heating and the cut in universal credit will force many to go without warmth this winter.
Ben Marlow, chief city commentator, says it has the potential to become a “massive political crisis” and an “economic catastrophe” that could derail the fragile recovery.
Can Britain survive Johnson?
Not all of the issues are Brexit related, although most of them are in one way or another. But there is no doubt that Brexit makes all of them more difficult to deal with. Labour shortages of both skilled and unskilled workers have been both triggered and made more difficult to resolve by Brexit.
Food and other shortages are either a result of or exacerbated by Brexit and are adding to pressure on rising prices and inflation. Migrants – asylum seekers and refugees – cannot be returned as easily as they could before Brexit.
The Union is looking more fragile than at any time since Ireland was partitioned exactly 100 years ago. Of all the prime ministers since, Johnson is surely the least equipped to hold it together.
There is little doubt we face a difficult winter. In the normal course of events, commentators at this point would begin to ask if an embattled prime minister can survive.
With Johnson, it is categorically different and we should be asking if Britain can survive much more Boris Johnson.
