UK stagnant economic growth 

by Nikola Bryce (Workers GB Writers Group)

It’s a grim economic forecast for the UK. Following the continuing effects of western sanctions sweeping in from the East and supply chain pressures, attributed to Brexit and a pandemic hangover, living standards, according to the Resolution Foundation, have taken the biggest hit in a 100 years.

Whilst inflation in the Eurozone dropped to 8.5% in February, the UK’s CPI has increased to 10.4%. In 2022 there was an estimated 14.5 million people, just over a fifth of the population living in poverty, 4.3m of which are children. The Independent reported: “Around 1.3 million Britons will be pushed into absolute poverty by the cost of living squeeze, after the chancellor failed to offer more support to low-income households in his Spring Statement…”

Food insecurity, fuel poverty and wages not keeping pace with inflation are just some of the factors hammering millions of UK citizens, provoking rail and many public sector unions to strike. Food prices are at a 45 year high, increasing by over 16% in the last 12 months. The Big Issue has reported: “Millions are being pushed below the breadline as food prices soar, with many struggling to feed themselves and their families.”

A society divided into two classes

However for some Brits it is not all doom and gloom. According to a Guardian report of March 2023 Richi Marie Antoinette Sunak’s:

“New private heated swimming pool used so much energy that the local electricity network had to be upgraded to meet its power demands… Sunak will personally pick up the cost of the electricity upgrade work estimated to have cost tens of thousands of pounds…”

Guardian

Sunak, the richest PM in UK history, made a cool £4.7m in 3 years, paying tax totalling £1,053,060. He waited a year to publicly declare his tax returns, publishing them on a day where headlines were dominated by Boris Johnson’s ‘party gate’ privileges committee grilling.

Another Brit flourishing financially in broken Britain is Boris Johnson. Whilst he’s living it large in rent free accommodation worth a reputed £20m in Knightsbridge, with an estimated rental value of £10,000pm, many of Britain’s private renters face the stark choice of paying skyrocketing rents or eviction and homelessness. The Bank of England has now raised interest rates 10 times in a row since December 2021, putting more pressure on renters as many landlords pass the rise onto their tenants.

In October 2022, the government closed new applications for its Help to Buy Equity Loan Scheme, whilst maintaining the 2019 freeze for Local Housing Allowance Rate housing benefit for private renters under the chancellor’s Spring Budget. Meanwhile, as if to rub salt in the wound, the Financial Times reported in March 2023: “The government’s levelling up department is set to spend 25% or nearly £2.5bn less on regeneration projects this year than planned, blaming housing market turmoil and delays on delivery… it included £1bn originally intended for new affordable homes this year.”

From homes to energy workers getting hit

The UK already generates half of its electricity from non-fossil fuel sources, with 25% each from renewables and nuclear. The cost of generating these renewables has dropped by over 40% over the past decade. However the structure of the UK’s energy market means the actual cost of producing renewable energy is not reflected in our bills.

In research led by UCL published in September 2022, they reviewed electricity sources and costs in the EU, UK and Norway finding that: “across the region fossil fuel electricity generation dictated electricity 66% of the time, despite only 37% of electricity being delivered from fossils fuels, 91% dictated by fossil fuels in Germany… 7% in France, where electricity prices are primarily dictated by nuclear energy production. In the UK, Italy and Spain more than 80% of the time, electricity prices are following the supply bids of natural gas generators.”

The government is well aware of this major fault line in the pricing of renewable energy. A fairer, more realistic pricing of renewables along with taking advantage of Brexit and abolishing VAT on energy would go a long way towards easing the burden of crippling energy prices. From 2013 to the end of 2021 ‘typical use’ energy bills in the UK was £575 per year. We are now being given reassuring messages that energy prices are predicted to fall to £2,153 per year in July: cold comfort indeed.

Economists and analysts attribute several reasons for the UK’s weak productivity growth and stagnating living standards including the decline of the over the bloated, financial services industry. It was only a matter of time before the US banking crisis migrated across the Atlantic. Credit Suisse, one of Europe’s oldest and most prestigious banks being the first of the European banks to collapse in this impending contagion within the banking sector.

Larry Elliott writes in the Guardian; “There is no possibility of a return to the curbs on banks that were in place during the 1950s and 1960s. Desirable though that would be, there is no political appetite for taking on an immensely powerful financial sector. But that, as has become evident in the past 15 years, has its costs. One is that economies dominated by the financial sector only deliver for the better off: the owners of property and shares. The second is that the financial markets have become hooked on the stimulus that has been provided by central banks. A third is that the crisis endemic to the system becomes much more likely when – as now – the stimulus is removed. Which means that eventually more stimulus will be provided, the markets will boom, and the seeds of the next crash will be sown.” This essentially means the vast majority of British people are living under a vampiric financial system that is not working in their best interests and which to add insult to injury they have to bail out every decade or so to the tune of billions to keep it in existence.

Still blaming Brexit, but capitalism is built to fail workers

The finger, as usual, is always pointed at Brexit when looking for reasons to blame any misfortunes befalling the UK. The Metropolitan elites will never forgive the British working-class for voting to leave the European Union. Betrayed by the Labour Party and its leader, lifelong Eurosceptic Jeremy Corbyn, the red wall landed the Labour Party a bloody nose in the 2019 election for their part in a concerted attempt to sabotage the referendum result. Shaken, the Labour Party leadership had the excuse they needed to dump Corbyn. Wrapping themselves in the Union Jack they scurried off to the nearest closet, never again to mention the love that dare not speak its name: Remain.

However the stagnation of the UK economy is not the fault of Brexit. Following the referendum many prophesied an economic slump. George Osborne predicted a “DIY recession“, a sharp rise in inflation, a stock market crash, a hit on house price growth of 18% and general Armageddon, but it didn’t materialise. It wasn’t until Covid and the west’s proxy war in Ukraine supported by many left and right Remainer harbingers of doom, that the threat of recession started to loom.

Britain like the rest of the collective west finds itself in a catch 22 vicious economic cycle. High energy prices fuelling inflation, continuous interest rate hikes in an attempt to bring down inflation, making it more expensive to borrow and to encourage saving may have the effect of slowing down growth, contrary to what the government wants. For those fortunate enough to save during the pandemic, many are now spending their savings to ease the pressure during this cost of living crisis whilst millions of other British people are completely tapped out.

Hot on the heels of Credit Suisse, Deutsche bank, founded in 1870 and Germany’s largest lender, is now rumoured to be in trouble, with shares falling across the European banking industry. Whilst the IMF forecast Russia will avoid recession and its economy expand by 0.3% in 2023, the UK’s is projected to contract by 0.6%, demonstrating the economic war as well as the kinetic war against Russia clearly isn’t working. Russian children were supposed to go school hungry, Russian families were supposed to suffer the consequences of high inflation as western sanctions took a stranglehold, devastating their economy, instead it is the middle income and vulnerable low income families of the UK and EU bearing the brunt of western sanctions, with many businesses going bust or moving to the US because of high energy prices.

Britain has been at the forefront of this war. Planned shipments of depleted uranium anti tank shells to Ukraine will poison the land, the people and inflict hideous deformities on babies yet to be born. According to a BBC report of November 2006 citing the WHO: “a process known as genotoxicity begins when depleted uranium dust is inhaled… the material enters the bloodstream, potentially affecting bone marrow, the lymphatic system and kidneys.”

The UK by their actions is taking this war nuclear. Amid EU threats of sanctions against Belarus, Russia is to install nuclear missiles with its neighbour this April in response to this reckless move. As nuclear tensions rise, a stagnant UK economy and recession may be the least of our problems.