Seeking British Solutions
Terry H. Schwadron
Oct. 27, 2022
Once again, we see Britain choosing Who, but not What or How.
We have witnessed the ascension of Prime Minister Rishi Sunak out of the political mess created, elongated and conducted by Conservatives in the United Kingdom mostly the result of failed economic proposals in a tough time. We have been introduced to his uniqueness as a non-white, Asian-heritage leader, his personal wealth, his wealthy wife and his seeming political reach across his own party.
But we have no idea really about what he plans to do with his new powers about addressing the results of Brexit, high prices, inflation, falling real incomes and an era of financial unsteadiness and distrust.
As I’ve argued before, this country ought to be paying attention to what Sunak called “fairy-tale economics” of his predecessor in proposing during all this large tax cuts for the wealthy and incentives to business growth — the exact formula that Republicans in the United States are proposing.
The Bank of England already has raised the cost of borrowing seven times in its attempt to address double-digit inflation — again, mirroring the actions of our Federal Reserve. The inevitable fallout will be rising unemployment and pressure on wages for workers.
Reuters explains that to balance a budget shortfall made worse by the rising borrowing costs that the crisis caused, the next prime minister will most probably have to oversee spending cuts and tax rises. A fiscal statement addressing this is due on Oct. 31.
Worsening Winter
All this comes as winter and high home heating costs loom, much of that the result of the Russian invasion into Ukraine and the disruption of global oil markets.
As here, Britain is seeing a jump in mortgage and rental prices, along with rising supermarket and fuel costs.
The question facing Sunak is how to appear open to hearing the plaint of the country’s most vulnerable, even as backing strict policies towards spending and taxes.
Instead, of course, media reports are focused on whether he can keep his party together and avoid another national election. That is a tall order for Sunak, a hedge fund billionaire who, at 42, has trouble coming across as someone who has empathy for anyone facing high supermarket prices.
For all of “Sunak’s appearance of calm and competence, he remains deeply out of touch with the country he will soon run. That country, economically stagnant, regionally unbalanced, socially strafed, is in dire need of compassionate leadership. In Mr. Sunak, by conviction a devotee of small-state Thatcherism and with no visible concern for the lives of the majority, Britain is unlikely to get it,” wrote British journalist Kimi Chaddah in The New York Times.
An analysis by Vox.com suggests the first order of business is to stabilize the UK’s economy after the Liz Truss proposals threw financial markets and politics into disarray. Chancellor of the Exchequer Jeremy Hunt — who was retained by Sunak for stability — is already asking government agencies other than the health and defense ministries to reduce their budgets by as much as 15 percent, Bloomberg reported .
The financial crunch for most Britons will only get tighter, as the value of the pound remains low while inflation remains above 10 percent on an annual basis.
One result of all this is that opposition parties on all sides are redoubling their calls for an early general election. Even his own party has rifts over key issues like Brexit and immigration as well as economic management.
Criticism Subs for Solutions
Sunak has criticized Truss’s tax-cutting agenda, saying he would instead only cut taxes once inflation had been brought under control. At the time he outlined a plan to cut income tax from 20% to 16% by 2029. He has backed the independence of the Bank of England and stressed the importance of government policy working alongside the central bank to tame inflation, not exacerbating it.
Higher taxes will be strongly opposed by some in the party; others will oppose spending cuts in key areas like health and defense.
Despite its fundamental force in worsening the UK’s economic problems, Sunak will not, and cannot, revisit the Brexit separation from the European Union.
Again, the lessons here seem obvious, and raise renewed questions as Americans approach our own election.
We’re all very excellent at criticizing. We are less good about problem-solving.
Why do we have such widespread support for Republicans running for Congress who emphatically have refused to propose solutions that differ from Democrats towards inflation and high prices? Why do we allow personalities to dominate when it is policies that are creating conditions that make daily life miserable for many?
When are we going to realize that the systems that create high prices are complex rather than simple slogans, and defining global economics as the cost of personal shopping lists is not going to fix anything?
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