Britain is rapidly entering its worst economic crisis since the 1970s, but it is a crisis hardly discussed by the two rightwing Conservative politicians vying for the premiership.
The National Institute of Economic and Social Research (NIESR) and the Bank of England have both pronounced that we are entering a recession that could last for much of next year. This will serve to aggravate already serious economic, industrial and social problems, with goodness knows how much public unrest.
Yet the message from Liz Truss and Rishi Sunak is that what really matters is whether that Conservative nirvana of tax cuts is offered now or later. Given the manifold examples of the deficiencies of public sector provision, the last thing this country needs is the smaller state and low-tax regime favoured by the Brexiters. Good services have to be paid for.
Meanwhile the Bank, much criticised for having been slow to guard against the onset of an acceleration in inflation, is now piling on the agony. While acknowledging that the main sources of current inflation – rises in energy and food prices aggravated by an economic war declared by Russia – are beyond its control, it has raised interest rates to guard against the possibility of imported inflation setting off a price-wage spiral and making things even worse.
Whether present inflationary circumstances are closely comparable to the 70s, when a price-wage spiral was built into the system, is questionable. These are choppy economic waters, but one thing is certain: the monetary squeeze directed at an attempt to arrest this outburst of inflation will worsen the recession. The Bank’s governor, Andrew Bailey, defends its earlier reluctance to raise rates as a precaution against stopping theRead more on theguardian.com