The Observer’s look at the UK financial crisis being made in Russia – oh stop Jeremy Hunt | Observer editorial team

Britain is getting poorer. Independently forecasts by the Office for Budget Responsibility, released last week, projected a 7% decline in living standards over the next two years – on average £1,700 per household, wiping out eight years of growth. real wages do not return to the levels where they were before the 2008-2027 financial crisis.

Chancellor Jeremy Hunt described this as “recession made in Russia‘ in his autumn statement last Thursday. Of course, the UK is being hit by the same recessionary drivers as the rest of the world: the Covid pandemic, followed by the impact of the Russian invasion of Ukraine on global energy and food prices. But it is dishonest to pretend that Britain’s dismal growth prospects are merely a product of global shocks. Other countries have proved more resilient, even as the UK economy shows weakness. The reason for this is 12 years of conservative economic policy and political instability, according to the Institute for Fiscal Studies has described as a series of “economic own goals”.

They started with George Osborne in 2010. As shadow chancellor, he had pledged to rebalance the economy away from consumption fueled by an inflated property market towards investment and export-led growth, and away from growth driven by the financial sector in London and the South East driven towards more evenly distributed regional economies. He used the financial crisis as an excuse to impose deep and unnecessary cuts on the public sector, underfunding the NHS, schools, adult education and public infrastructure, while undermining the social safety net for underpaid parents and people with disabilities. These cuts have made Britain a much tougher place to live, where winter pain-relieving surgeries are routinely canceled and working parents are forced to rely on food banks to feed their children. But they have also hurt Britain’s long-term growth potential: more people off the job due to long-term illness, more people without the skills and qualifications they need to thrive economically, and more businesses hampered by poor infrastructure outside the South. East.

Then came a Brexit that was not primarily driven by a democratic mandate – the people didn’t vote for a Brexit that meant a drastic disruption in economic ties with our largest trading partner – but by the Conservative Party’s takeover by its Eurosceptic ideologues . They knew they could not win a Brexit mandate by being honest about its costs, so they took advantage of a country suffering from some of the troubles largest regional disparities in Europe, exacerbated by Osborne’s spending cuts to offer a populist solution: a fantasy Brexit that would lead to prosperity by reducing migration and freeing up more public spending on the NHS. In short, a series of lies.

George Osborne as Shadow Chancellor in March 2010
George Osborne as Shadow Chancellor in March 2010: “Used the financial crisis as an excuse to impose deep and unnecessary cuts on the public sector.” Photo: Suzanne Plunkett/REUTERS

Boris Johnson-delivered Brexit has eroded the country in two ways. It has squeezed Britain’s medium-term growth potential at a time when the country could barely afford it. Far from the rebalancing promised by Osborne, it has hampered export-led growth. People will be poorer for the coming decades. This is a big part of why the UK economy remains smaller than when the pandemic began, while the German, French, Italian, Canadian and American economies have grown. Unfortunately, all those who warned that Britain could not afford to leave the single market and the customs union were right. The areas of the country that can least afford it will be most affected by the Brexit penalty.

The party’s Eurosceptic takeover has also created instability and produced the worst prime ministers this country has ever seen. Nowhere was this more evident than in Liz Truss and Kwasi Kwarteng’s disastrous mini-budget. Only seven weeks of their tenure cost billions in higher interest rates and government borrowing costs.

This is the reality of the situation Britain finds itself in. It is not a “recession made in Russia” but a global shock to which Britain is uniquely vulnerable due to 12 years of Conservative rule. That’s why Hunt has had to raise taxes across the board: because the decisions taken by Tory prime ministers and chancellors have cost the economy dearly, forcing Britons not only to accept the impact of record inflation on their real wages, but higher tax burdens as well.

It is true that Hunt has eased its self-imposed fiscal rules enough to reduce the magnitude of the immediate pain, allowing working-age benefits to rise in line with inflation and postponing the worst spending cuts until after the next election. But the pain many feel will still be deep and has been exacerbated by Tory economic incompetence. People who didn’t have a budget a decade ago will be significantly poorer by the next general election as a result of years of cuts in support for working parents and people with disabilities. The NHS will continue to be underfunded and understaffed and will therefore provide below average levels of care as a direct result of a lack of resources. The government will not adequately fund the back-up education needs of children from disadvantaged backgrounds who have been hardest hit by the pandemic, and they will feel the consequences for the rest of their lives. Britain is getting poorer and the Conservative Party, not Vladimir Putin, is largely to blame.

Leave a Reply

Your email address will not be published. Required fields are marked *