Erecting trade barriers with your largest trading block to chase after unicorns was always going to have negative effects. However, not once during the Brexit negotiations did I think that we would end up with a government that would so blatantly disregard the economy, health and standards of living.
So far, the only people to have benefited from the country’s newly found Brexit “freedoms” are the shareholders of energy companies who are benefiting from our weak government’s refusal to freeze the price cap. Similarly, sewage companies who are now free dump sewage on our once pristine beaches, while other disaster capitalists who stand to make a fortune as the UK economy fails.
Brexit has replaced replace EU trade deals with worthless ones with smaller markets, meaning the UK has become the worst performing major economy except for Russia. Some of these new deals are so bad that they even negatively impact the British economy. Who do you think is responsible for these failures? That’s right, it’s Liz Truss.
A normal, somewhat competent government has its proposals looked at by experts to assess their economic impact. Truss is refusing to have an economic impact assessment for her planned economic policies. So far, the only major economic policy where an impact assessment was sidestepped was Johnson’s Brexit deal – look at how poorly that is playing out.
It is incredibly dangerous to pursue policies based on ideology without bothering to look at their impact. Policies, especially economic ones, must always be driven by data no matter your political outlook. If your political outlook is robust and you believe in it, then you should be more than happy to submit it to independent experts. If they think it will fail, then the proposed policy was wrong. To not adopt this line of thinking during a recession and rampant inflation is utter insanity.
Without an impact assessment, the country would be flying blind into the storm in the most reckless way imaginable. I have no idea how Truss’s mind works but the most reasonable explanation I can think of is that she is fully aware that it would lead to disaster. Her motive? To push on ahead to keep the public unaware and the disaster capitalists happy.
There is a global crisis in the cost of energy. Through a combination of Russia’s invasion of Ukraine and corporate greed, energy prices have been rising across the world. It is much worse in the UK solely because of our utterly useless government.
Confirmed rises in the Autumn (compared to Summer 2021) puts the increased cost of energy in France at 4%, the USA at 6%, Germany at 38%, Italy (the second worst performing major economy) at a whopping 83% and the UK has a world-beating 178%. By Spring 2023 this is expected to reach at least 418%. This horrendous figure is for households. Business on the other hand have no protection hence fears over mass bankruptcies and job losses. The combination of mass unemployment and mass inflation will be a disaster.
Johnson’s recent comments about Ukrainians paying with their blood so we must endure higher bills are pathetic. Other EU states, those much more affected by the current war, have governments that were competent enough to impose price cap limits early on. The UK could easily have done the same. Also, this attempt at emotional blackmail is disgusting and shows that nothing is too low for Johnson.
The latest prediction for inflation currently stands at 18.6%. This horrendously high figure is being driven by energy costs. The energy costs are being driven by corporate greed.
What are Truss and her team planning on doing to curb inflation? The answer: make it worse by increasing productivity and creating more demand by cutting taxes. This will not help for two main reasons. Firstly, this would not tackle the root cause and would only benefit the wealthy who can already cope with the extra cost of living and would do nothing to help anyone else. Secondly, the problem is not with demand but with supply. if you create more demand when your problem is supply (in this case high cost of energy) you are just going to drive inflation higher.
Truss will have to do something if her party has any chance of winning the next election. The rhetoric she is adopting now is to appeal to wealthy party members, not the public at large. The Tories could get away with recklessness during the Brexit negotiations because it hadn’t happened yet and any criticism of their plans in 2016-2019 was dismissed as “project fear” but the same stance will not work now. As soon as Truss enters Number 10 she would need to start appealing to normal Conservative voters.
And what is appealing to Conservative voters? Labour proposes to introduce a freeze on the energy price cap. If Truss wants to survive politically, one of the first things she would have to do is a monumental U-turn and introduce one of Labour’s proposals.
The only way to resolve the current inflation crisis is by dealing directly with the root cause: energy prices. This is a simple fix. All the government needs to do is impose an energy price cap freeze to stop prices from rising. This can be paid for by reducing the profits of energy companies and taxing the record profits of oil companies.
Let’s hope she sees sense before things are too late.