The scale of the mess we are in is way beyond just figures and forecasts. In fact it is hard to recall a forecast which turned out to be right. But our biggest problem is about the ability of government to function independently when crafting the economic management of its country. We saw under the ill fated Truss regime what happens when you ignore the markets. Now we can see what happens when you satisfy the markets. Just about the biggest drop in living standards on record.
Why? Because for far too long there has been this lunatic ideology that you can have a prosperous economy based on consumption, when it makes next to nothing it consumes. It then builds an illusion of wealth founded on inflating house prices, against which ever larger sums are borrowed and ever smaller sums are saved. Soon no new wealth is being created but when the money runs out you just print more. Moreover you tax low to enjoy ‘a small state’ while maintaining public services at advanced economy levels. Because the government cannot raise enough revenue to pay for them, it borrows, day by day, month by month and year by year. Who from? The markets. Where do the markets get their money from? The government prints it for them, to keep them from crashing, then borrows it back at a hefty rate of interest. Barmy? Yes but sadly true.
The years since the Tories first came to power in the post Blair era when in 2010 they formed a coalition with the Lib Dems, are now widely seen as years of stagnation and decline. They blame Putin, the pandemic and the world rise in energy costs, but in truth these negative forces just made a bad situation worse. At the heart of our economic crisis lie two completely rotten planks of modern Tory ideology. One is that all saving and wealth creation should be driven into fixed assets. This has led to absurd house price inflation which has sucked the life blood out of the real economy tasked to create new, not recycled or inflated, wealth. The second is the blinkered doctrine that you can have low taxes and effective, efficient and timely public services which can expand on demand.
The outcome is that public services are now in a general state of collapse, so that third world levels of inefficiency are now the norm. But it has also, through a decade long programme of keeping taxes and interest rates low, led to the highest taxation levels for seventy years and interest rates at their highest in a generation, with more rises in the pipeline because inflation is out of control. The buzz phrase is cost of living crisis and the national experience is of fear, worry and suffering.
Time is very up for this Tory party and its befuddled ideology which fosters greed, selfishness and darkness. The government’s authority has sunk to zero as angry trades unions call for strikes all across the public and transport sectors. Sadly the maths make the coming mega crisis certain. There will be a recovery, though when, at what price and and how long, are as yet all unknowns.
In the end through the toil and effort of a resilient people, the sunny uplands will be reached for sure. The best of which will be that the Tories are nowhere to be seen.