One economist has claimed that Britain’s economic struggles are more similar to those in the 1970s after World War II.
As now, it was difficult to match workers with the right job openings, according to Neil Shearing, group chief economist at Capital Economics, which led to a rise in unemployment even amid labor shortages in sectors such as mining and farming.
It comes as some economists have questioned whether Britain is experiencing a flashback to the 1970s. A combination of fuel shortages and signs of recession – where prices rise as economic growth slows – has triggered parallels with 1978–1979, known as the ‘Winter of Discontent’. Other issues, such as energy security concerns, compared the so-called ‘three-day week’ earlier in the same decade, where a coal shortage triggered electricity rationing.
Boris Johnson has labeled the supply chain disruption and current labor shortage in the UK as part of a “period of adjustment” after Brexit. He, and other cabinet ministers, including Trade Secretary Kwasi Quarteng, have argued that the government should not respond by reaching for a lever called “uncontrolled immigration”.
This suggests there will not be a long-term provision to alleviate driver shortages for foreign workers, which have led to chaos at petrol pumps or the fears of 120,000 pigs due to a shortage of slaughterhouse and butchery workers.
Meanwhile, Chancellor Rishi Sunak said the economic problems caused by Brexit will be worth it in the long run in his Monday Tory Party conference speech:
“I was proud to support Brexit, proud to go on vacation. And that is because despite the challenges, in the long term, the agility, flexibility and freedom that Brexit provides from the market in the global economy of the 21st century Will be more valuable than closeness.”
However, economists are more troubled by the situation, with some suggesting that the current supply crisis will lead to a long-term victory. The effects of the pandemic, combined with the shock of disintegrating some economic ties in the continent, led economists to believe Britain was facing economic challenges compared to the 1940s, including ending the furlough plan and ending troops. There is a strong comparison between demolishing.
After the war, millions of soldiers were relieved of duty, but the labor market suddenly could not absorb them all. This caused the unemployment rate to rise from almost zero during the wartime to 3 percent by 1947.
Yet Britain attempted to correct the labor shortage in the post-war period by encouraging immigration. The UK sought to attract Commonwealth immigrants, who had the right to British citizenship, from the Caribbean. In many cases, the government paid for the movement of people to bridge gaps in sectors such as healthcare and construction. By the 1970s, post-war Caribbean arrivals became known as the Windrush Generation, named after the ship that had purchased some of the emigrants in 1948.
The post-war situation “resonates”, with labor shortages in many sectors, despite unemployment still sitting well above pre-pandemic levels, Mr Shearing said. There are also parallels with higher government spending, larger budget deficits and increased consumer savings.
“During the pandemic, the lockdown prevented consumers from spending income, thereby accumulating savings. During the war, rationing played a similar role,” Mr Shearing said.
However, the approach by central banks to controlling price increases has changed, exchange rates have changed, and the labor market is more flexible, allowing workers to move from job to job more easily. It is also unclear whether Britain’s overall working population has shrunk as severely as it did after the war.
Nevertheless, the comparison provides a sense of the scale of the economic challenges facing the UK, but also the ability of its economy to recover and grow. Both periods saw a sharp rise in public debt levels, a problem Sunak sought to address on Monday, suggesting that tax cuts would not be feasible in the short term:
“Our recovery comes with a cost,” he told representatives. “Our national debt is almost 100 per cent of GDP.
“That’s why we need to fix our public finances. Because strong public finances don’t happen by accident. They are a deliberate choice. They are a legacy for future generations and protect against future dangers. “
Credit: www.independent.co.uk /