Wait a minute. It looks like nobody’s clocked the ‘surprise’ buried in the Chancellor’s budget. Brace yourselves. Because by this Christmas, UK living standards will collapse more than at any point since WWII.
That’s because of the relationship between stagnating wages and inflation. Figures hidden in the budget from the Office for Budget Responsibility (OBR) project RPI inflation will rise to 4.1% in the final quarter of the 2017 financial year. So the cost of living will greatly increase. Meanwhile, a report from the Bank of England shows that nominal wage growth will actually fall in response to higher inflation, not increase. Coupled together, and we have a record-breaking fall in our standard of living.
Brexit = greatest standard of living downgrade in post-war UK
After WWII, real UK income was on an upward rise. Then the financial crash happened in 2007/8. Since then, UK wages have dropped 10.4% in real terms. This has only been matched by the economic calamity in Greece. By contrast, real wages grew in Poland by 23%, in Germany by 14%, and in France by 11%.
The Coalition and Conservative governments facilitated the wage repression with the slowest economic recovery since records began.
Rising inflation is linked to gyrations in the oil market. But primarily, the downfall of the pound since the EU referendum is responsible for increasing inflation. A depreciating pound raises the price of imports. This will especially hit the UK, which gets more than half of its food and feed from abroad, for example.
Despite the worrying projections Chancellor Philip Hammond himself used, his budget did not even mention Brexit. Even though the official date for invoking Article 50 has been announced as 29 March. The omission will feed into the perception that the government has no real plan for the huge issue of Brexit. In November, a leaked government document stated that “no common strategy has emerged”. It also warned that the 500+ Brexit projects were “beyond the capacity and capability” of Theresa May’s administration.
We could have it so much better
In an even broader perspective, the budget contained no answers to the pressing issues of the 21st century. The Chancellor apparently has nothing to say about climate change, automation or geriatric care. Last year, for example, a study from Bank of America Merrill Lynch reported that, within just 20 years, up to 35% of UK jobs and 47% of those in the US are at risk of being replaced by machines.
If these big questions were tackled head on, we could achieve the biggest rise in living standards in history. Automate menial jobs and power the robots through renewable energy. Novara Media Co-founder Aaron Bastani says:
Take Uber. Huge company. Its idea is that by 2030 it will have this huge global network of driverless cars. That doesn’t need to be performed by a private company. Why would you have that?
Why couldn’t we have something like Uber with driverless cars provided at a municipal level without a profit motive?
Unemployment is not a problem if the fruits of clean, robotic labour are shared. On the other hand, the Conservative vision looks set to turn back the clocks to before WWII. Let’s dump it.
– Read more from The Canary on Budget 2017.
Featured image via Wikimedia