Inflation crisis: Due to various factors including war in Ukraine and Covid-19.

nlogax

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At this rate we'll soon need some sort of Reddit-style megathread as we collect an entire Panini sticker album of ongoing issues. Right now,

- Gas price hikes
- CO2 shortages
- General HGV driver shortages
- Inflation due to price rises
- Potential of fuel rationing (again - driver shortages)

Anything else we need to consider?
 
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birchesgreen

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Judging by the trouble the likes of Chiltern recently had getting rail replacement buses, a shortage of bus drivers too?

So much winning.
 

DynamicSpirit

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It seems that 60% of the countries CO2 production has been controlled by one multinational that has chosen to shut off production to suit its owners. This aspect of the crisis has therefore clearly been caused by unfettered global free market ideology. One might ask "where has the competitions and markets authority been in all of this ?"

Support for free markets shouldn't imply one close-to monopoly supplier. I don't believe free market theory ever says that monopolies or near-monopolies are a good idea, so I don't think you can blame that on 'free market ideology'. I would suspect a failure of regulation in terms of regulating monopolies - as you allude to.

The "market" always magically provides what is needed remember.

I know I'm being a bit pedantic and you're probably being a bit ironic, but I don't believe any theory of the market says that. Rather, free market theory (usually, correctly) says that, if there is demand for something and it's possible to supply that thing at or below the price people are willing to pay for it, then a free market will normally do so more efficiently/cost-effectively than any other system.

The problem comes when something is (a) essential, and (b) people really need whatever it is but can't afford to pay the actual cost of supplying the commodity - which is roughly the case here, and that requires Government intervention.
 
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yorksrob

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Support for free markets shouldn't imply one close-to monopoly supplier. I don't believe free market theory ever says that monopolies or near-monopolies are a good idea, so I don't think you can blame that on 'free market ideology'. I would suspect a failure of regulation in terms of regulating monopolies - as you allude to.



I know I'm being a bit pedantic and you're probably being a bit ironic, but I don't believe any theory of the market says that. Rather, free market theory (usually, correctly) says that, if there is demand for something and it's possible to supply that thing at or below the price people are willing to pay for it, then a free market will normally do so more efficiently/cost-effectively than any other system.

The problem comes when something is (a) essential, and (b) people really need whatever it is but can't afford to pay the actual cost of supplying the commodity - which is roughly the case here, and that requires Government intervention.

But should the free market extend to the purchase and sale of companies themselves !

Obviously there are many shades of intervention, however the ideology here seems to be particularly weak on the takeover of companies.
 

devon_metro

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Our comparative lack of gas storage capacity compared to other countries will also be causing volatility. I learnt on the radio today that we closed a big chunk of gas storage in 2017, in spite of continual issues of having so little (around nine days worth, compared to ninety in France, as an example). The thought was that we "could always buy some from somewhere" if we needed it.

The closure of the Rough storage site in 2017 isn't having an impact on current prices for what it's worth. UK gas supplies are secure - in fact we're currently exporting some volumes to Ireland/Continent whilst also filling the limited storage we do have. The comparison with France isn't that useful, since we produce around half of our supply domestically. France is very much import dependent so it's prudent to have a larger storage reserve.
 

yorksrob

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The closure of the Rough storage site in 2017 isn't having an impact on current prices for what it's worth. UK gas supplies are secure - in fact we're currently exporting some volumes to Ireland/Continent whilst also filling the limited storage we do have. The comparison with France isn't that useful, since we produce around half of our supply domestically. France is very much import dependent so it's prudent to have a larger storage reserve.

It doesn't seem to be enough to temper market volatility though.
 

devon_metro

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It doesn't seem to be enough to temper market volatility though.

The gas market volatility is entirely driven by the global situation though - Asia is very hungry for gas right now. Asian prices are also going ballistic like in Europe, so it's not as localised as the media may portray.
 

DynamicSpirit

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But should the free market extend to the purchase and sale of companies themselves !

In theory it ought to: How free markets work should apply to anything being bought/sold, and the fact that the things being bought and sold are companies doesn't itself make any difference.

However, in practice it won't work so well for large companies, because free market theory works when there are lots of buyers and sellers selling interchangeable products - so that if a buyer doesn't like one seller's price, he/she can easily just buy from someone else instead. If you're selling an entire large company then there are probably only going to be a couple of potential buyers. Plus the company is probably unique. A buyer can't just say, I don't like the price, I'll buy this other near-identical company instead - because there probably isn't another comparable company in existence up for sale. There are also going to be difficulties valuing a company and determining the market price - all that's pretty bad news for free markets. And of course that's partly why large company buyouts are usually so tightly regulated.
 

Dai Corner

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In theory it ought to: How free markets work should apply to anything being bought/sold, and the fact that the things being bought and sold are companies doesn't itself make any difference.

However, in practice it won't work so well for large companies, because free market theory works when there are lots of buyers and sellers selling interchangeable products - so that if a buyer doesn't like one seller's price, he/she can easily just buy from someone else instead. If you're selling an entire large company then there are probably only going to be a couple of potential buyers. Plus the company is probably unique. A buyer can't just say, I don't like the price, I'll buy this other near-identical company instead - because there probably isn't another comparable company in existence up for sale. There are also going to be difficulties valuing a company and determining the market price - all that's pretty bad news for free markets. And of course that's partly why large company buyouts are usually so tightly regulated.
Well, the potential buyer of a company has to offer a high enough price to persuade the owners of at least half the shares to sell them. That determines the value of the company.

When there's no bid in progress the value of a company is determined by the price shares are currently trading at. The shares themselves are the 'interchangeable products'.
 

TPO

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At this rate we'll soon need some sort of Reddit-style megathread as we collect an entire Panini sticker album of ongoing issues. Right now,

- Gas price hikes
- CO2 shortages
- General HGV driver shortages
- Inflation due to price rises
- Potential of fuel rationing (again - driver shortages)

Anything else we need to consider?
None of this is new or sudden and Blair has a lot to answer for, he continued and massively expanded what Thatcher started. I remember......

Thatcher destroyed Scargill, the NUM and the coal industry and started privatisation

Blair encouraged low waged workers from Eastern Europe and the contracting out of manual jobs, what infrastructure development there was used PFI plus even more infrastructure was privatised.

Scientists and engineers too often were deemed a non productive overhead and axed, so R&D was also largely curtailed, especially the sort of long term govt backed blue sky research that gave us so many of the things we use today. I am one of those with a PhD in a physical science who was surplus to requirements and had to find another way ( and accidently ended up working in the rail sector).

Then the greenies persuaded govt to phase out coal and introduce green taxes on coal used to generate electricity... whilst the Chinese still opening loads of coal fired plants and the Germans replaced nuclear with electricity from burning lignite which is the most polluting coal possible.

Yup UK govts been self harming UK for over 20yrs to make a moral point, whilst any pollution reduction made by UK- tiny in world terms- has been outweighed in spades by the actions of others especially China.

It was a massive virtue signalling exercise; I wonder if such virtue signalling will keep people warm at night if we get a cold winter? It's already cost too many decent jobs.

I remember the days when Cardiff public library had a whole section with coal references including clean coal research, but that went the way of the APT and I suspect that section of the library is gone now.

The rare earth metals needed for so called clean solar, electric cars and windmills are extremely polluting to mine and the waste includes radioactive elements such as thorium. But as it happens in China where the journos cannot go, it doesn't get mentioned.

Wind been below usual this summer revealing the serious weakness of renewables ie unpredictability and volatility.

It's all coming home to roost. My (now late) father predicted this 20 years ago. Oh boy how right he was.

Wages and conditions for HGV drivers are poor thanks to 20 years of lots of imported cheap labour hence domestic HGV drivers leaving the industry. There's also more unused HGV1 licences held than vacancies and thanks to poor management and posturing unions at DVLA tests are in massive backlog as is most of what they do such as issuing licence updates. The cogs eventually aligned and the long foreseen consequences are being realised.

Fossil fuel including gas is not just costly but also taxed, but that's what the greeniacs are demanding. Welcome to the end of cheap electricity.

We desperately need a nuclear energy programme and a national energy policy and grid system that is fit for purpose.


We've had 2 decades of posturing emoting arts graduate govts- senior officials and PMs/ministers- plus an unfettered favouring of big corporates all seasoned with MSM that thrives on using emotion to gain audience share- and here we are.

TPO
 

brad465

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None of this is new or sudden and Blair has a lot to answer for, he continued and massively expanded what Thatcher started. I remember......

Thatcher destroyed Scargill, the NUM and the coal industry and started privatisation

Blair encouraged low waged workers from Eastern Europe and the contracting out of manual jobs, what infrastructure development there was used PFI plus even more infrastructure was privatised.

Scientists and engineers too often were deemed a non productive overhead and axed, so R&D was also largely curtailed, especially the sort of long term govt backed blue sky research that gave us so many of the things we use today. I am one of those with a PhD in a physical science who was surplus to requirements and had to find another way ( and accidently ended up working in the rail sector).

Then the greenies persuaded govt to phase out coal and introduce green taxes on coal used to generate electricity... whilst the Chinese still opening loads of coal fired plants and the Germans replaced nuclear with electricity from burning lignite which is the most polluting coal possible.

Yup UK govts been self harming UK for over 20yrs to make a moral point, whilst any pollution reduction made by UK- tiny in world terms- has been outweighed in spades by the actions of others especially China.

It was a massive virtue signalling exercise; I wonder if such virtue signalling will keep people warm at night if we get a cold winter? It's already cost too many decent jobs.

I remember the days when Cardiff public library had a whole section with coal references including clean coal research, but that went the way of the APT and I suspect that section of the library is gone now.

The rare earth metals needed for so called clean solar, electric cars and windmills are extremely polluting to mine and the waste includes radioactive elements such as thorium. But as it happens in China where the journos cannot go, it doesn't get mentioned.

Wind been below usual this summer revealing the serious weakness of renewables ie unpredictability and volatility.

It's all coming home to roost. My (now late) father predicted this 20 years ago. Oh boy how right he was.

Wages and conditions for HGV drivers are poor thanks to 20 years of lots of imported cheap labour hence domestic HGV drivers leaving the industry. There's also more unused HGV1 licences held than vacancies and thanks to poor management and posturing unions at DVLA tests are in massive backlog as is most of what they do such as issuing licence updates. The cogs eventually aligned and the long foreseen consequences are being realised.

Fossil fuel including gas is not just costly but also taxed, but that's what the greeniacs are demanding. Welcome to the end of cheap electricity.

We desperately need a nuclear energy programme and a national energy policy and grid system that is fit for purpose.


We've had 2 decades of posturing emoting arts graduate govts- senior officials and PMs/ministers- plus an unfettered favouring of big corporates all seasoned with MSM that thrives on using emotion to gain audience share- and here we are.

TPO
That's neoliberalism for you.
 

Gostav

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It was a massive virtue signalling exercise; I wonder if such virtue signalling will keep people warm at night if we get a cold winter?
Don't worry, when you feel suffering, imagine about snuggling in the arms of OUR LEADER, when feel hard imagine about hold OUR LEADER's hands.

 
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yorksrob

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The gas market volatility is entirely driven by the global situation though - Asia is very hungry for gas right now. Asian prices are also going ballistic like in Europe, so it's not as localised as the media may portray.

But it rather defeats the object of having your own supply if it doesn't moderate market volatility. Perhaps the nature of private ownership is the issue.
 

Dai Corner

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But it rather defeats the object of having your own supply if it doesn't moderate market volatility. Perhaps the nature of private ownership is the issue.
The domestic production for the next year or two has probably been sold to industry and retail suppliers at pre-determined prices. That's why we're able to get fixed-price tariffs. The suppliers who've failed to do this are the ones who've gone bust.

I saw a TV interview yesterday with someone from one of the smaller energy retailers. He said his company was fine, having bought enough to cover what they expected to sell to their existing customers. He really didn't want to be forced to take on new customers from competitors who'd gone bust as he'd have to buy at current prices and sell at no more than the Government price cap, making a loss.
 

yorksrob

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The domestic production for the next year or two has probably been sold to industry and retail suppliers at pre-determined prices. That's why we're able to get fixed-price tariffs. The suppliers who've failed to do this are the ones who've gone bust.

I saw a TV interview yesterday with someone from one of the smaller energy retailers. He said his company was fine, having bought enough to cover what they expected to sell to their existing customers. He really didn't want to be forced to take on new customers from competitors who'd gone bust as he'd have to buy at current prices and sell at no more than the Government price cap, making a loss.

Yes, I suppose that works to an extent. Shame its not like oil where you can turn on a few extra wells if need be.
 

Dai Corner

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Yes, I suppose that works to an extent. Shame its not like oil where you can turn on a few extra wells if need be.
I imagine you can, but you'll want to get the current market price for your extra production.
 

brad465

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The energy price cap is going up by 12%, which will add to the inflation concerns at consumer level:


A squeeze on household finances will become more acute as a new, higher energy price cap takes effect from Friday.
Typical default domestic energy bills are rising by £139 a year, and prepayment meter customers will see a £153 increase.
About 15 million households in England, Wales and Scotland are affected.
The cap has come under the spotlight owing to the crisis among suppliers, which has seen nine firms fold.

The cap limits how much providers can raise prices. Even so, the current increase is the biggest jump, to the highest amount, seen since the backstop was introduced in January 2019.
It represents a 12% rise in energy prices at a time of the year when, charities point out, people are about to use more heating and lighting during colder, darker days. It also coincides with other price rises hitting family budgets and the withdrawal of Covid support schemes, although the government has promised to continue financial help for the poorest households.
The cap does not apply in Northern Ireland where prices are overseen by a regulator.

Continued
 

Starmill

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But it rather defeats the object of having your own supply if it doesn't moderate market volatility. Perhaps the nature of private ownership is the issue.
It would help if we had bothered to really try and sort out our electricity supply so that it did not use natural gas too (as well as cutting out coal and oil), as that would have helped moderate local demand. As usual we've done a half job. Proper "smoothing" in this country too by storing energy either electrically or potentially using fluids and pumps is obviously essential to that.
 

yorksrob

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It would help if we had bothered to really try and sort out our electricity supply so that it did not use natural gas too (as well as cutting out coal and oil), as that would have helped moderate local demand. As usual we've done a half job. Proper "smoothing" in this country too by storing energy either electrically or potentially using fluids and pumps is obviously essential to that.

Yes, I agree with that. I think the overdependence on natural gas is a bit of a hangover from the north sea oil days as much as anything.
 

317 forever

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Although the headline inflation figure is reported as due to rise to 4%, in practice we will feel a higher rate of inflation than that. Inflation is calculated as an average of price rises between various commodities. So while the prices of essentials such as food and gas rise faster than non-essentials such as cinema visits and books, we will experience a higher inflation than the headline figures would suggest.
 

Dai Corner

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Although the headline inflation figure is reported as due to rise to 4%, in practice we will feel a higher rate of inflation than that. Inflation is calculated as an average of price rises between various commodities. So while the prices of essentials such as food and gas rise faster than non-essentials such as cinema visits and books, we will experience a higher inflation than the headline figures would suggest.
The Consumer Prices Index (CPI) does take into account how much is spent on different things by a typical person. Thus energy and food are given more weight than cinema tickets and books. How closely an individual's personal inflation rate follows CPI will depend on how they spend their money.

The ONS Guide goes into plenty of detail.

A convenient way of thinking about the CPIH and CPI is to imagine a very large “shopping basket” full of goods and services on which people typically spend their money: from bread to ready-made meals, from the cost of a cinema seat to the price of a pint at the local pub, from a holiday in Spain to the cost of a bicycle. The content of the basket is fixed for a period of 12 months, however, as the prices of individual products vary, so does the total cost of the basket. The CPIH and CPI, as measures of that total cost, only measure price changes. If people spend more because they buy more goods this is not reflected in the index.

The quantities or “weight” of the various items in the basket are chosen to reflect their importance in the typical household budget.

In practice of course we all spend different amounts on various goods and services that show different price movements.

While no-one is “average”, it is still convenient to have summary price measures which, although they may not strictly apply to any one individual or family, will still give us a useful yardstick of the impact of inflation on our own pocket or purse.

Considerable care is taken to ensure that the shopping basket is kept up-to-date and is representative of people’s spending patterns: the places and shops we go to, the goods and services that we buy and the amounts we spend on them.
 

brad465

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Crisis? What crisis?


Boris Johnson is "not worried" about the current jobs gap and rising prices in the UK, saying supply chains will sort themselves out "rapidly".
The PM told the BBC that the economy was facing the "stresses and strains" of a post-Covid recovery.
But he said the country was "moving to a new approach", with companies paying higher wages for UK workers, rather than relying on low paid immigration.
And he claimed government schemes, like the hardship fund, would help people.
Mr Johnson also said he was not worried about inflation as he believed "supply would match demand".

Earlier, the prime minister denied there was a crisis in the UK, despite a shortage of HGV drivers disrupting fuel deliveries and leaving some shelves empty, and a range of industries warning there was a lack of skilled workers as a result of both the pandemic and Brexit.
He told BBC Radio 4's Today programme the country was at a "turning point" and the UK's "world leading" logistics industry would fix the issues.
The PM also said on BBC Breakfast that only 127 HGV drivers had applied for temporary visas offered by the government to help tackle the shortage.
The department for business said 27 drivers had been identified, but have not confirmed what the prime minister's number of 127 was referring to.
The Road Haulage Association said a three month visa "simply wasn't attractive enough for European truckers to give up their current jobs for a short term contract - perhaps only weeks long - with all the hassle, including short term rents, that would be involved."
 

TravelDream

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None of this is new or sudden and Blair has a lot to answer for, he continued and massively expanded what Thatcher started. I remember......

I hate to defend Blair, but I think you are being rather harsh blaming him for the current issues.

Unbridled Neo-liberalism is an issue through most of the west. Senior management/ boards no longer look at annual turnover and profit, but monthly and quarterly. Long-term strategic planning seems to have gone the way of the dodo. It's all this month, quarter and then year.
Some countries do a lot better than us on it though. I think an issue we have is too many foreign owned companies and botched privatisations. There are some great examples here though. Look at the collaborations between universities and pharmaceutical companies which have led to multiple highly profitable (medically and financially) advances.

The movement of workers from Eastern Europe would have happened if Thatcher herself was still PM (or basically any other PM of either party). A lot of blame goes on those workers - some of it fair, but a hell of a lot of it not.
Look at the food we currently have rotting in fields. That type of work is paid by weight harvested. Even a decade ago, it wasn't unusual for Romanians to earn £15 an hour on an average day. Very few Brits are willing to do that work though. This isn't a British issue. The US imports millions of farm workers from Mexico and has for many decades. Even Poland is importing agricultural workers from Ukraine as too few Poles want to do it. Try to find a Singaporean laborer in Singapore or an Emirati in the UAE. You won't. It's an issue is most wealthy countries.
Also, a lot of the issues with the lorry driver shortage aren't really to do with pay as such, but with conditions. Drivers in Britain are treated badly by everyone - their companies, central government, local government, motorway services etc. etc. and we have some of the worst driver facilities in Europe. The government increasing driver maximum hours does the opposite of they want as it makes more look for greener pastures.

On arts graduates, your comment does seem like a cheap shot - though I do agree with you to an extent. Universities in the UK have expanded too much and expanded in the wrong areas. When the polys became unis in the early 90s and then student numbers shot up through the 90s and 00s, a lot of focus should have been put on STEM and practical subjects, but it wasn't which was a big failure of both the Major and Blair governments. There's nothing wrong with arts graduates, we just have too high a proportion of them.
 

asw22

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An alternative economic theory (see Keynesian economics)
When demand matches supply then shortages are rare.
If demand exceeds supply then either supply needs increasing or demand needs decreasing.

So thinking of a business that sells 5 million units (products) per month at £1 each with a 5p margin (profit per unit).
Some sort of economic shock occurs which leads to a shortage in the supply chain limiting the company selling capacity to 4 million products.
The company can either react by paying its supplier(s) more and increase the cost of the product to maintain their 5p margin.
Or it may settle for 4 million units and realise that it now needs to make 6.3p margin - fewer products means fewer staff and resources are required (staff redundancies / layoffs / reduced hours / recruitment freeze etc)
Or reduce its margin to try to remain competitive
Or more likely a balance between the three.

The government sees this and realises that there is no money left (due to pandemic spending) and is under pressure from factors like climate change to reduce consumption. So instead of increasing supply, it decides to reduce demand by increasing taxes / reducing benefits so that the population's (disposable) income decreases. This in turn means that customers now buy fewer products for example a customer that bought 5 products per month now buys 4 instead. So fewer products bought mean that demand reduces to match supply. This in turn helps with the government's money flow and reducing climate change. Overseas trade decreases due to lower import demand and increased export prices.

Some companies will protest this change as they seek to maintain their turnover / profit by seeking lower costs, while significant parts of the population lose out due to higher prices, lower budgets and likely job losses. Assuming that adequate training is provided then the labour shortages then reduce also so we end up with a smaller higher priced economy. Overseas trade reduces as import demand decreases and exports become more expensive.

There are several risks that may come to light for example lack of retraining and testing (eg DVSA) availability or jobs in the wrong part of the country that leads to rising unemployment in some areas and shortages in another area.
Or demand reduces further than planned so that the company above can only sell 3.5 million products per month. This leads to a surplus which then the company either decides to discount the product or sell fewer units which in turn leads to more job losses as the company seeks to maintain its margins. Then we end up in a deflationary cycle where customers hold off purchasing today something that they expect will be on sale 10% cheaper next month. Which leads to further job losses.

-----------
A second example: gas price 5p per KWH increases to 10p per KWH. Customer can only afford to spend £50 per month so halves their gas usage as a result, reducing demand and helping with climate change. However this may then cause damage to the customer's health which then puts strain on the NHS which then requires extra funding etc.
 

317 forever

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I hate to defend Blair, but I think you are being rather harsh blaming him for the current issues.

Unbridled Neo-liberalism is an issue through most of the west. Senior management/ boards no longer look at annual turnover and profit, but monthly and quarterly. Long-term strategic planning seems to have gone the way of the dodo. It's all this month, quarter and then year.
Some countries do a lot better than us on it though. I think an issue we have is too many foreign owned companies and botched privatisations. There are some great examples here though. Look at the collaborations between universities and pharmaceutical companies which have led to multiple highly profitable (medically and financially) advances.

The movement of workers from Eastern Europe would have happened if Thatcher herself was still PM (or basically any other PM of either party). A lot of blame goes on those workers - some of it fair, but a hell of a lot of it not.
Look at the food we currently have rotting in fields. That type of work is paid by weight harvested. Even a decade ago, it wasn't unusual for Romanians to earn £15 an hour on an average day. Very few Brits are willing to do that work though. This isn't a British issue. The US imports millions of farm workers from Mexico and has for many decades. Even Poland is importing agricultural workers from Ukraine as too few Poles want to do it. Try to find a Singaporean laborer in Singapore or an Emirati in the UAE. You won't. It's an issue is most wealthy countries.
Also, a lot of the issues with the lorry driver shortage aren't really to do with pay as such, but with conditions. Drivers in Britain are treated badly by everyone - their companies, central government, local government, motorway services etc. etc. and we have some of the worst driver facilities in Europe. The government increasing driver maximum hours does the opposite of they want as it makes more look for greener pastures.

On arts graduates, your comment does seem like a cheap shot - though I do agree with you to an extent. Universities in the UK have expanded too much and expanded in the wrong areas. When the polys became unis in the early 90s and then student numbers shot up through the 90s and 00s, a lot of focus should have been put on STEM and practical subjects, but it wasn't which was a big failure of both the Major and Blair governments. There's nothing wrong with arts graduates, we just have too high a proportion of them.
After her No No No speech, let us suppose she had remained PM until at least 2004. I disregard her age, potential re-election or defeat as an MP (Finchley went Labour in 1997) and anything that may have happened to her health. Anyway, I sincerely doubt she would have signed up to aspects of any EU treaty that would have eroded our borders the way Blair enabled the floodgates to open for EU immigrants.
 

TravelDream

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After her No No No speech, let us suppose she had remained PM until at least 2004. I disregard her age, potential re-election or defeat as an MP (Finchley went Labour in 1997) and anything that may have happened to her health. Anyway, I sincerely doubt she would have signed up to aspects of any EU treaty that would have eroded our borders the way Blair enabled the floodgates to open for EU immigrants.

I think you are misinterpreting her stance from that speech.

Thatcher was certainly against further integration with a powerful European executive and against the creation Euro, but she was pro-European in a trade sense. She was also avidly anti-communist and would have been ideologically happy to take former Warsaw Bloc countries into the Western capitalist fold.

Despite her 'no, no, no' speech, she continued discussions with the EC which led to the signing of the Maastricht Treaty and creation of the EU in 1992. Yes, Major was PM by then, but most of the negotiating was done under her. The UK had 'opt-outs' on both the Euro and the Agreement of Social Policy (which would have meant minimum benefit standards across the EU) which I think shows what Thatcher considered to be important.

Oh, and there were no floodgates to open. If Poland etc. etc. had joined the EU/ EC under Thatcher, there would have been freedom of movement.
 

Peter Sarf

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I hate to defend Blair, but I think you are being rather harsh blaming him for the current issues.

Unbridled Neo-liberalism is an issue through most of the west. Senior management/ boards no longer look at annual turnover and profit, but monthly and quarterly. Long-term strategic planning seems to have gone the way of the dodo. It's all this month, quarter and then year.
Some countries do a lot better than us on it though. I think an issue we have is too many foreign owned companies and botched privatisations. There are some great examples here though. Look at the collaborations between universities and pharmaceutical companies which have led to multiple highly profitable (medically and financially) advances.

The movement of workers from Eastern Europe would have happened if Thatcher herself was still PM (or basically any other PM of either party). A lot of blame goes on those workers - some of it fair, but a hell of a lot of it not.
Look at the food we currently have rotting in fields. That type of work is paid by weight harvested. Even a decade ago, it wasn't unusual for Romanians to earn £15 an hour on an average day. Very few Brits are willing to do that work though. This isn't a British issue. The US imports millions of farm workers from Mexico and has for many decades. Even Poland is importing agricultural workers from Ukraine as too few Poles want to do it. Try to find a Singaporean laborer in Singapore or an Emirati in the UAE. You won't. It's an issue is most wealthy countries.
Also, a lot of the issues with the lorry driver shortage aren't really to do with pay as such, but with conditions. Drivers in Britain are treated badly by everyone - their companies, central government, local government, motorway services etc. etc. and we have some of the worst driver facilities in Europe. The government increasing driver maximum hours does the opposite of they want as it makes more look for greener pastures.

On arts graduates, your comment does seem like a cheap shot - though I do agree with you to an extent. Universities in the UK have expanded too much and expanded in the wrong areas. When the polys became unis in the early 90s and then student numbers shot up through the 90s and 00s, a lot of focus should have been put on STEM and practical subjects, but it wasn't which was a big failure of both the Major and Blair governments. There's nothing wrong with arts graduates, we just have too high a proportion of them.
In the late 1970s I worked for the Kent Land Corps. I was a student and the summer break provided an opportunity to earn money from the harvest. Apart from Hop Picking the other jobs were poorly paid. I was not surprised but these agricultural jobs served as a reminder to me that I was expected to continue in further education. I do not think that younger people today would countenance working outdoors in a hard job. The parallel now is perhaps that most of them dream of stardom etc while working in a service industry. So what has changed is that fewer of us are prepared to pick our own food and fewer of us are prepared to cook our own food.
 

XAM2175

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I do not think that younger people today would countenance working outdoors in a hard job. The parallel now is perhaps that most of them dream of stardom etc while working in a service industry.
Do you think that you might, just possibly, be making quite a large and sweeping generalisation here?
 

yorksrob

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An alternative economic theory (see Keynesian economics)
When demand matches supply then shortages are rare.
If demand exceeds supply then either supply needs increasing or demand needs decreasing.

So thinking of a business that sells 5 million units (products) per month at £1 each with a 5p margin (profit per unit).
Some sort of economic shock occurs which leads to a shortage in the supply chain limiting the company selling capacity to 4 million products.
The company can either react by paying its supplier(s) more and increase the cost of the product to maintain their 5p margin.
Or it may settle for 4 million units and realise that it now needs to make 6.3p margin - fewer products means fewer staff and resources are required (staff redundancies / layoffs / reduced hours / recruitment freeze etc)
Or reduce its margin to try to remain competitive
Or more likely a balance between the three.

The government sees this and realises that there is no money left (due to pandemic spending) and is under pressure from factors like climate change to reduce consumption. So instead of increasing supply, it decides to reduce demand by increasing taxes / reducing benefits so that the population's (disposable) income decreases. This in turn means that customers now buy fewer products for example a customer that bought 5 products per month now buys 4 instead. So fewer products bought mean that demand reduces to match supply. This in turn helps with the government's money flow and reducing climate change. Overseas trade decreases due to lower import demand and increased export prices.

Some companies will protest this change as they seek to maintain their turnover / profit by seeking lower costs, while significant parts of the population lose out due to higher prices, lower budgets and likely job losses. Assuming that adequate training is provided then the labour shortages then reduce also so we end up with a smaller higher priced economy. Overseas trade reduces as import demand decreases and exports become more expensive.

There are several risks that may come to light for example lack of retraining and testing (eg DVSA) availability or jobs in the wrong part of the country that leads to rising unemployment in some areas and shortages in another area.
Or demand reduces further than planned so that the company above can only sell 3.5 million products per month. This leads to a surplus which then the company either decides to discount the product or sell fewer units which in turn leads to more job losses as the company seeks to maintain its margins. Then we end up in a deflationary cycle where customers hold off purchasing today something that they expect will be on sale 10% cheaper next month. Which leads to further job losses.

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A second example: gas price 5p per KWH increases to 10p per KWH. Customer can only afford to spend £50 per month so halves their gas usage as a result, reducing demand and helping with climate change. However this may then cause damage to the customer's health which then puts strain on the NHS which then requires extra funding etc.

An alternative is that you could try to use incentives, such as tax, tarriffs etc to try and encourage the population to spend money on ways that benefit the domestic economy for longer. Simplistically, you would have a much lower rate of VAT on activities such as hospitality and domestic food and drink, but higher VAT on electronic goods which tend to be imported.

In the late 1970s I worked for the Kent Land Corps. I was a student and the summer break provided an opportunity to earn money from the harvest. Apart from Hop Picking the other jobs were poorly paid. I was not surprised but these agricultural jobs served as a reminder to me that I was expected to continue in further education. I do not think that younger people today would countenance working outdoors in a hard job. The parallel now is perhaps that most of them dream of stardom etc while working in a service industry. So what has changed is that fewer of us are prepared to pick our own food and fewer of us are prepared to cook our own food.

I used to do temping on farms and in food factories in the 90's (also in Kent). Although it was mostly indoors - packing etc. Being quite a rural area it formed the majority of such work.
 
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