Strikes, inflation, depression… back in the 70s?More like the breakup of Thatcherism | Will Hutton

TonDespite the obvious similarities—oil shocks, recessions, seasons of dissatisfaction, inflation—he’s not the 1970s any more. What we are going through is something deeper. It’s a painful disintegration of a dysfunctional Thatcher economic model driven by credit, consumption and property prices, so careless about investment, productivity and good, high-performing workplaces. Its end began in the financial crisis, accelerated with Brexit, and is now sealed by the economic fallout from Ukraine.

Given the backward-looking national economic dialogue dominated by Thatcherian platitudes and myths about the horror of public debt, it is not obvious that it will succeed. With the right leadership, this could be the moment to develop new growth models, 21st-century business models and high-paying jobs, fight regional inequality and rebuild our relationship with Europe.

Given the directionless, unprincipled Boris Johnson government, it is more likely to be caught in the most difficult economic environment since World War II – unprecedented social distress, deep divisions and economic stagnation. Challenges are rarely so severe, and the future has never been so difficult.

this week railway strike It is the latest trigger for fears that Britain is revisiting the 1970s and its test of union power. But no single industry, such as coal mining, on which a country can now rely can be used by unions as a lever in wage bargaining. There are no large mass employment sites vulnerable to strikes; most importantly, unionization rates are halved. This week will be inconvenient for many, but the three-day strike day will resemble three mini-lockdowns rather than a three-day week with families huddled around candles in the gutter.

In fact, knowing that inconvenience is tolerable means that public support for the action is surprisingly high. People may not know the details of the stats – total pay growth in the public sector is 1.5% compared to 8% in the private sector (including bonuses) – but they smell unfair, mean and receptive Everything you touch with Johnson. Why shouldn’t public sector workers resist drastic real wage cuts and mass unemployment?

This represents broader mood swings. Whether it’s homeowners struggling to fix their mortgage rates when interest rates skyrocket, or people walking miles to the food bank because they can’t afford a car, it’s widely believed that not only is life suddenly hard and harder, but no one owns us back. Institutions to turn to for support have been weakened and hollowed out by 12 years of Toryism. Civil society must fight back.

Sharon Graham’s election last year as general secretary of Unite, with her commitment to focus on the core of trade unionism – fighting for better pay and conditions – rather than the dead end of Corbynite politics, was a tribute to this mood. Millions Well-planned savers also insist they want their retirement income to come from investments that make the world a better place: a staggering third of all £9 trillion funds managed in the UK are exclusively invested in well-managed, committed Corporate environmental and social improvements – and exponential growth.

Thousands of people over the age of 50 have resigned from an increasingly unpleasantly high-stress world of work, another aspect of the quest for the better. Combined with returning EU nationals, this means that the workforce is down by almost a million. As the Bank of England pointed out in the minutes of last week’s Monetary Policy Committee meeting, 1.3 million vacancies were roughly equal to the number of unemployed, an indicator of a tightening labor market (more prominent in the context of the end of the EU’s free movement of labor) member).

The central bank also noted that core commodity inflation hit 8%, more than double the euro zone inflation rate. Senior members of the Monetary Policy Committee have told me that public sector pay must and will be higher than the 2%-3% range set in last fall’s spending review if it is only to prevent savage and unsustainable cuts in real wages. Against this backdrop, if the central bank is serious about bringing inflation back to its 2% target and preventing already rising inflation expectations from becoming entrenched, it will have to raise interest rates closer to 4% — and the sooner it does so. Action is better.

Recession, investment strikes, falling house prices, bitter pay disputes, real social woes, stubbornly high inflation, and continued weakness in our trade with the EU have all caught our eye – this is what happens when the economic model collapses matter.

But just as Thatcherism emerged from the 1970s, so must a new philosophy for our time. Its components are still obscure, but already obvious. The trillions of dollars in ESG (environmental, social and governance) savings needed to be mobilized in partnership with governments to carry out the great national mission of upgrading, realigning our energy systems and grids for net-zero emissions, opening up spaces, transforming our cities , building new resilience and supporting our science.

A new ecosystem needs to be created to support the growth of our future companies – importantly, Shadow Chancellor Rachel Reeves has just Announce Looking back at this – in turn, great companies of the 21st century need to be organized around the pursuit of goals rather than short-term profits.

There must be a new resolution of rights and obligations at work, better relationships with empowered unions, and a serious commitment to developing our human capital. We need a social safety net that protects us.

The country’s top priority must be proactively planning all this, not Pavlovian tax cuts and debt reductions. There needs to be a constitutional solution that integrates the rule of law and integrity into government and guarantees freedom and democracy. No more immoral, illegal King Boris and his sycophants.

The next few years will be tough, but those responsible will be punished in the elections. The road is open for those who dare to challenge.

Will Hutton is the Observer columnist