It’s the silly season at the moment. We’re in August, which meteorologically speaking is the last month of summer. Apart from Putin’s ongoing brutal war on Ukraine and China playing war games off Taiwan, there’s nothing much going on. Closer to home, politics has all but closed down. Boris Johnson is spending the final month of his miserable spell of being prime minister by going on the piss or going on holiday, so no change there, and the only other thing that’s going on is the leadership campaign to succeed him. Even the Great British Weather is behaving itself for once. Even Covid is ‘over’ with only 930 additional deaths in the last week and a mere 7870 people admitted to hospital, which is excellent news if you haven’t died or gone to hospital. Let’s relax and enjoy ourselves. Things can only get better, right? Maybe not. If the Bank of England is right, things are about to get a helluva lot worse.
Interest rates have today gone up from 1.25% to 1.75%. Rather obviously, that will impact hugely on many people’s mortgages and on people’s ability to borrow. For savers, you might think this would be good news but really it’s just less bad news. And that’s because said Bank of England is now predicting that inflation will peak at 13.3% as soon as October. You know, October when the utility price cap will increase by a further 78%, in addition to the 54% increase we had in April, with another increase to follow in January 2023. With a long, deep recession on the way, is it any wonder people are beginning to tighten their belts? We certainly are. Yet the country, currently without any meaningful form of leadership, is sleepwalking into disaster.
Seemingly, the only two active politicians are the foreign secretary Liz Truss and former chancellor Rishi Sunak and they are doing anything but running the country. When you see them, at public meetings where the only people present are elderly Tory party members who will choose the next PM, they are making wild, unfunded promises whilst at the same time dissing each other. There are no references to the crashing economy which will, within weeks, engulf large swaths of the country. For a simple observer like me, it is utterly surreal. Both leadership candidates are duds, one a Pound Shop Margaret Thatcher tribute act and the other the slick, smooth and utter vacuous multimillionaire ‘Brand’ Rishi Sunak. One of these two inadequates is about to inherit the worst economic crisis in living memory.
At home, our belt-tightening is currently modest. We’re cutting back on spending money in the hospitality industry. We’ve trimmed the on-line shop. We are more careful on how we use gas and electric. We are using our cars much less. These changes to our lifestyle are modest, as much to do with anticipating the coming downturn than choosing between heating and eating, although who is to say that we won’t need to make more fundamental changes somewhere down the line? We’re not in trouble and I hope we won’t be, but the point is that millions will. And that does worry me.
We will not be the only people considering delays to future expenditure, maybe even the abandonment of some projects. When large numbers of people stop spending, it effects everyone else. The builder, the chippy, the spark, the plasterer for sure. All manner of businesses, especially in manufacturing, will adjust seek to cut costs. Would you seek to change jobs if you feared that a deep recession might see your new employer making redundancies? Last in, first out? Dreams come true, but they also turn into nightmares. Today’s good news is tomorrow’s misery.
Just in case we get even more complacent, let’s remember what a recession is. Six months of an economy shrinking, with increased unemployment and drops in the sales of goods and services. It is not a blip. Sure, the better off, like, for example, Truss and Sunak, will be able to brush off the negative effects. Sunak will not have to worry about his local swimming pool closing because he’s building one next to his house. Sunak admitted years ago that he has no working class friends so his social group will remain untouched, but mine won’t and I suspect yours won’t either.
I am worried about what’s coming, not least because an awful lot of people aren’t prepared for it. Money Saving Expert Martin Lewis has said repeatedly that the future is grim and most sensible people believe him. But it’s not just politicians who are either not thinking about it or in denial.
The only people who can save the country are those who have taken us here, the liars and chancers of Brexit who promised us the Earth and instead brought the country to its knees.
The austerity years of Cameron, May and Johnson were disastrous for the least well off. The coming catastrophe will spread a wider net and drag down people who never thought they’d struggle. Meanwhile, the politicians talk to themselves.
And worst of all, these aren’t my predictions: it is what the Bank of England and the government is literally telling us what is going to happen. Get that bunker ready. We’re going to need it.