Is the United Kingdom the sick man of Europe again? | International

The dozens of longshoremen who have been planted all week at the access roundabout to the port of Felixstowe, on the east coast of England, receive constant signs of support, with the sound of the horn or loudly from the window, by the drivers that pass near them. 1,900 workers at the main gateway to goods arriving in the UK – 43% of imports – have massively backed an eight-day strike. They ask for a wage increase close to 10%, the level at which inflation in the country currently stands. The company, which in 2020, at the peak of the pandemic, had profits of 72 million euros before taxes, offers an increase of close to 7.5%. There is no understanding.

Nor has there been in other strikes that have turned these last two months into the British “summer of discontent”: railways, buses, subways, postal service workers and even public defenders. “People are fed up. And here in Felixstowe, where the entire community depends on the economy of the port, you can understand better than anywhere that the citizens can’t take it anymore, they can’t go on anymore,” explains Miles Hubbard, the regional representative of the powerful Unite union, which has fully organized and supported the mobilization of port workers.

When at the end of June the RMT (Railways, Maritime and Transport) central managed to get 40,000 workers from the public company Network Rail and 13 other private operators to support a strike on intermittent working days, the Johnson Government came to think that the wind would play in their favor, and that a fight with the unions would end up putting a jaded citizenry on their side. Nothing further than what happened. The population’s support for wage demands has been constant. Britain’s main confederation of workers’ organisations, the TUC, warned sternly of cascading conflicts to come as the year progressed: teachers, nurses, postal workers, municipal officials, longshoremen…” salaries frozen, or cut, and they feel it more and more in their pockets, ”announced Frances O’Grady, the general secretary of the TUC.

Europe is heading towards a recession, but the United Kingdom symbolizes the perfect storm, and many economists are beginning to wonder if, once again, as happened at the end of the 1970s, the country that Boris Johnson left to halfway through his term, and which still does not have a stable government, he is once again “the sick man of Europe”. Everything that is happening on the mainland is aggravated on the island.

The increase in the price of gas and electricity affects many countries, but the way in which both the Government and the British institutions are dealing with the problem leads the United Kingdom right to a serious situation of energy poverty. Since, in 2019, the Conservative Prime Minister, Theresa May, imposed limits on the annual average price that companies could charge consumers, the regulatory body of the Office of Gas and Electricity Markets (Ofgem, in its acronym in English) reviews this limit every six months —now every three, to avoid major disruptions in the market. In October 2021, the figure was around 1,500 euros per year on average per household. For the same month of 2022, Ofgem confirmed this Friday that the price will rise to 4,200 euros.

“You have to act, and you have to act now. This zombie government needs to wake up before September 5 [la fecha prevista para el anuncio del sustituto de Johnson]. The debate for the leadership of the Conservative Party can no longer ignore this national cataclysm, which affects the mental health and even the very lives of people, “says Martin Lewis, the founder of the MoneySavingExpert website.

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In this area too, drastic solutions are met with drastic proposals. The Don’tPayUK (Don’t Pay, United Kingdom) movement, which has collected almost 150,000 signatures, intends to reach a million supporters, and that all of them stop paying energy suppliers from October 1, if the increase in prices are unsustainable. “Massive non-payment is not a new idea,” the promoters of the protest explain on their website. “It already happened in the UK in the late 1980s and 1990s, when around 17 million people refused to pay the Poll Tax. [el Impuesto de Capitación, fijo por persona al margen de su renta o recursos]and they ended up overthrowing the Government”, they affirm.

Social networks have made such a movement much more powerful, which also uses a gradual response to increase pressure on companies. The first step of the rebellious citizens would be to cancel the direct debit of their receipts. In this way, they prevent the company from charging first and explaining later. Mo Budd, a 35-year-old Anglican priest from south London, was among the first to publicize and join the cause. “None of us wants to break the law or have problems with energy companies,” she explained to The Times newspaper at the time. “But as a person of faith, it is my duty to act in solidarity with the most vulnerable in my community.”

Unlike other countries such as France or Spain, which have acted directly on wholesale energy prices to relieve citizens, Johnson’s conservative government has allowed companies to pass on all gas price increases to consumers. Despite the fact that Rishi Sunak, one of the two contenders in the primary process launched this summer to elect a new prime minister, announced last June aid of almost 500 euros per household, to deal with energy costs, the acceleration in rising prices has made these subsidies insufficient. Both Sunak and his rival and clear favorite in the polls, Liz Truss, have avoided any proposal that directly affects the way companies operate. It is true that, albeit reluctantly, Sunak finally approved an extraordinary tax —windfall tax, in the English term— on the “profits that fell from the sky” of energy companies, but, in general terms, the two competitors for the conservative leadership only They propose a VAT reduction or more direct aid to families.

A precarious government

About to fully enter the path of recession —in the second quarter of the year, GDP decreased by 0.1%, and the Bank of England forecasts five consecutive quarters of decline—, the Conservative Party remains locked in its competition internal, with contradictory and confusing visions on the part of the two rivals on how they plan to face the perfect storm if they finally reach Downing Street.

The one with the best chance of reaching the goal, Truss, is firmly committed to a rapid tax cut, despite the fact that inflation is out of control. The former Minister of Economy, Sunak, wants to present himself as a politician with a higher fiscal responsibility than his competitor, who is aware of the problems and does not want to play with fire. His message doesn’t seem to be getting through to the 160,000 members who must elect Johnson’s successor. To add tension, Truss has questioned the response carried out so far by the Bank of England to curb inflation -since December 2021 it has already raised interest rates from 0.1% to 1.75%-, and even the independence of the monetary authority, which was consolidated by the then Labor Prime Minister, Gordon Brown, in 1997.

And to top it off, Brexit

As much as the few EU nostalgics still surviving in Parliament at Westminster continue to blame Brexit for all of the UK’s current ills, the truth is that the current decline is widespread. But it is also true that the country concentrates in its economy the ills of Europe (sharp increase in imported energy and food prices) and the United States (spiral rise in the price of services, with labor shortages). And leaving the EU has not helped. “Brexit is making everything harder. It is still very difficult for companies to export to what is still their main market, the EU; there are frictions that did not exist before, ”explains Duncan Weldon, market researcher and author of a book in which he has reviewed and analyzed 200 years of economic history of the United Kingdom.

History never repeats itself exactly. The energy crisis and the spiral of inflation that led to the neoliberal success of Margaret Thatcher have nothing to do with the current situation. And the current flexibility of the labor market, together with union weakness, prevent the current conflict from approaching the levels of the late seventies. They sound, however, similar echoes. The United Kingdom is spoken of again as the sick man of Europe. With a substantial difference: on the two previous occasions, the recipe was to join, or commit more, to the European Union. And that is off the board today.

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