The Observer’s view on the British financial crisis playing out in Russia – Oh, stop it, Jeremy Hunt | Observer editorial

Britain is getting poorer. does not depend on Forecasting From the Office for Budget Responsibility published last week it predicted a 7% drop in living standards over the next two years – with an average of £1,700 per family, which spent eight years of growth. Real wages will Don’t go back to levels Which was before the 2008 financial crisis until 2027.

The chancellor, Jeremy Hunt, described this as:stagnation in RussiaIn his autumn statement last Thursday. Of course, Britain is affected by the same drivers of recession as the rest of the world: the Covid pandemic, followed by the impact of the Russian invasion of Ukraine on global energy and food prices. But it is dishonest to pretend that Britain’s bleak growth outlook is merely a product of global shocks. Another is that it is more resilient, even as the British economy is showing its fragility.The reason for this is 12 years of conservative economic policy and political instability: What is the Institute for Fiscal Studies has been described As a series of “special economic objectives”.

Those started b George Osborne in 2010. As shadow chancellor, he had promised to rebalance the economy away from consumption driven by a bloated housing market towards investment and export led growth, and away from financial sector driven growth in London and the South East towards more evenly distributed regional economies. He has used the financial crisis as a pretext to impose deep and unnecessary cuts on the public sector, underfunding the NHS, schools, adult education and public infrastructure, while eroding the welfare safety net for low-wage parents and people with disabilities. These cuts have made Britain a much tougher place to live, with pain relief routinely canceled during the winter and working parents forced to rely on food banks to feed their children. But it also hurt Britain’s long-term growth potential: more people out of the labor market due to long-term ill health, more people lacking the skills and qualifications they need to succeed economically and more businesses hampered by poor infrastructure outside the south-east.

Then came Brexit driven mainly not by a democratic mandate – people did not vote for Brexit which constituted a radical severance of economic relations with our largest trading partner – but by its Eurosceptic ideology’s takeover of the Conservative Party. They knew they couldn’t win a Brexit mandate by being honest about its costs, so they took advantage of a country suffering from some The largest regional disparities in Europe, worsened by Osborne’s spending cuts, to offer a populist solution: a Brexit that would lead to prosperity through reduced immigration and free up more public spending for the NHS. In short, a series of lies.

George Osborne appointed Shadow Chancellor in March 2010
George Osborne as Shadow Chancellor in March 2010: “Used the financial crisis as an excuse to force deep and unnecessary cuts on the public sector”. Photograph: Suzanne Plunkett/Reuters

Boris Johnson’s Brexit has corroded the country in two ways. It has reduced Britain’s medium-term growth potential at a time when the country can barely afford it. Far from the rebalancing Osborne promised, it has held back export-led growth. People will be poorer for decades to come as a result. It is a large part of why the UK economy has remained smaller than it was at the start of the pandemic, while the German, French, Italian, Canadian and US economies have grown. All those who warned that Britain could not afford to leave the single market and customs union were unfortunately proven right. The areas of the country will be the least able to afford it hardest hit Sanctions of Britain leaving the European Union.

The Eurosceptic takeover of the party has also destabilized it, producing the worst prime ministers this country has ever seen. Nowhere was this more evident than in the disastrous mini-budget by Liz Truss and Kwasi Quarting. Only seven weeks into her premiership cost billions In high interest rates and government borrowing costs.

This is the reality of the situation in which Britain finds itself. It is not a ‘recession in Russia’, but a global shock to which Britain is uniquely exposed as a result of 12 years of Tory government. Which is why Hunt has to raise taxes across the board: because decisions made by Tory prime ministers and chancellors have cost the economy so much, Britons are forced to swallow not only the impact of record levels of inflation on their real wages, but higher tax bills.

True, Hunt has relaxed his self-imposed fiscal rules just enough to allow him to reduce the amount of immediate pain, so that working-age benefits increase in line with inflation and the worst spending cuts are pushed back until after the next election. But the pain felt by many will run deep, exacerbated by the Tories’ economic incompetence. People who didn’t have a bidder in their budgets a decade ago will be poorer by the next general election as a result of years of cuts to support for working parents and people with disabilities. The NHS will continue to be underfunded and staffed and therefore provide substandard levels of care as a direct result of a lack of resources. The government will not adequately fund compensation for children from disadvantaged backgrounds who will be hardest hit by the pandemic and will feel the consequences for the rest of their lives. Britain is getting poorer and the Conservative Party, not Vladimir Putin, is largely to blame.

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