Silencing the Cassandra’s? The UK’s Winter Economic Forecast and the Tory Government’s Role in the Crisis

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Jeremy Hunt MP, Chancellor of the Exchequer, addresses delegates at a conference.

By Dr Huw Macartney
Associate Professor in Political Economy
Department of Political Science and International Studies, School of Government

The UK Chancellor, Jeremy Hunt, recently portrayed the UK economy as being in rude health and sought to silence the Cassandra’s who predict a bleak winter ahead. This week positive news about falling food prices might appear to vindicate his diagnosis. Aside from food prices though, most other economic indicators are not looking good. Moreover, the UK seems caught between a rock and a hard place – with policymakers’ hands tied – meaning that we’re likely in for another winter of discontent. But in the midst of these economic woes, it is important to remember that we did not arrive here by accident; the Tory government bears a large portion of the blame.

Food prices rose by 12.2% in the year from September 2022 to September 2023. That is still an eye-watering amount, but it was met with welcome cheers by observers who noted that the year-on-year change had fallen from its recent high of 19.2% in March. In reality though, the ONS reports that 45% of adults were still buying less food when food than in recent months and a found that 5% of adults had run out of food in the past few weeks and been unable to purchase more. So, whilst slower food price rises is moderately good news, it would be premature to breathe a sigh of relief as yet.

Amid the economic data, it is important not to forget the key political takeaway: that this is a mess of Tory creation. This is particularly significant given the general election just around the corner.

The truth is that most other economic indicators point to some extremely challenging months ahead. Despite home energy costs falling moderately, 43% of adults have reported difficulties in paying them, and as temperatures drop more families will feel the pinch. A further 47% reported that they were using less energy because of concerns about prices. Unsurprisingly 40% of adults surveyed said that they were experiencing difficulties in paying either mortgage or rental costs. And the truth is that the Israel conflict is already driving up fuel costs again. The takeaway is that there is a long, hard road ahead.

Amid the economic data, it is important not to forget the key political takeaway: that this is a mess of Tory creation. This is particularly significant given the general election just around the corner. To be sure, the inflationary impact of “unavoidable” Covid measures needs to be considered. But as we argued in our 2022 book on inequality during the pandemic, even those emergency measures were systemically biased in favour of asset-owners and financial investors – whilst poorer households were left to languish on meagre and temporary aid.

Trussell Trust figures also reflect the Tory failures, with 800,000 more emergency food parcels being distributed this year than last. That theme has continued throughout the cost-of-living crisis, with the Conservative government seemingly inept at or unwilling to provide meaningful assistance to the most underprivileged members of society. Measures like the Energy Price Guarantee have, in the words of a recent House of Commons report, become “less generous”. Indeed, Chancellor Jeremy Hunt also recently announced a further crackdown on benefit claimants,  with the implicit aim of bringing more disabled people back into the workforce. Whilst scrapping the uprating of working-age benefits in line with prices next year is predicted to plunge an additional 400,000 children into absolute poverty, according to the Resolution Foundation.

Meanwhile, we hear news that the Tories are planning to add to the misery in the November budget by squeezing public spending even further due to the increase in the UK’s borrowing costs. Though Russia’s invasion of Ukraine pushed up both inflation and interest rates however, the Tories themselves have also contributed to the pain with the fallout from the disastrous Truss—Kwarteng mini-budget.

It is therefore somewhat ironic that in 2010 the Tories again used high government debt to rationalise their refusal to help the working poor. But in 2010, they blamed the outgoing Labour government for the state of the public finances. This time round there is no one else to scapegoat and the political irony must not be ignored. After more than a decade of watching as austerity measures decimated our social and welfare provision, this winter it will again be the cash-strapped lower-middle and poorer households that will bear the brunt of this Tory tragedy-cum-farce.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Birmingham.

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