Labour government: Public sector pay promises that cannot be delivered will be the beginning

 

Is the edifice already starting to fall apart? Rachel Reeves promises of public sector pay rises have already backfired with Unions told that what they were promised is not affordable.

Winning an election acting under false pretenses is not a sign of political stability.

The 2024 September Budget will be crucial to know if this is the end of the beginning or the beginning of the end for the new Labour Administration, and this without taking into account dangerous statements that could take Britain to war in Europe, a war that will transform the Britain mainland into a battlefield.

Labour Administrations have a tendency to get Britain involved in disastrous wars. In 1997, Tony Blair won a historic majority only to get Britain involded in two major military conflicts that spelled absolute disaster. If Keir Starmer follows suit, the consequences for Britain would be catastrophic.

Labour will put up taxes: no matter how many times they try to deny it, improvements have to be paid for

 

No matter how many times, Keir Starmer or any other Labour party supporter tries to deny it, the fact remains that promises made by the Labour Party will have to be paid for by rising taxes and Council Tax is the one thing that will be targetted as it was targetted in Birmingham to try to rescue Birmingham from bankruptcy. 

You cannot increase salaries across the public sector and invest monies to rescue the British Armed Forces from extermination without paying for it with higher taxes. For many, next July is going to be a very hot summer and not just because of weather conditions. 

Remember: there is no free lunch. And we must start wondering how rising taxes and rising prices in the shops are going to affect the economy and what the political consequences will be for the country as a whole. Any worsening of financial circumstances will push people towards extremes.

Conservative government: What next?

 Conservative Government: What next?

Since the days of Boris Johnson and in spite of then then 80 seat majority, the Conservative Administration has been plagued by both issues that they could not possible foresee and control and by situations that arose because of measures they took that turned into yet another crisis.

The Covid Pandemic declared in March 2020 put everybody to the test and lockdown measures adopted to apparently tackle the pandemic generated a whole new series of issues, increasing divisions within the Conservative Government. It was about 'Lockdown or no Lockdown'. 

The start of declared hostilities in Ukraine was yet another test. Sanctions against the Russian Federation backfired and produced an energy crisis that destabilized the British Economy. The long standing stability with low prices and low interest rates gave way to higher interest rates and higher prices that in turn produced a series of strikes and forced the government to add more protection measures on top of the protective measures adopted during Lockdown to prevent a sudden rise in unemployment due to lack of economic activity.

Once the government started to regain control the crisis in Palestine opened a whole new can of worms. The fact that people immediately took sides reflects the tribal nature of Britain and this, unavoidably, led to yet another reshuffle to try and have some kind of equilibrium both in national terms and in terms of geopolitics.

All the way, from Covid, going through Lockdown, sanctions against the Russian Federation that led to rising inflation and the present issues involving Palestine, fractures within political parties became fairly visible. It is like walking on a high rope without a balancing pole. As the saying goes, 'keep your friends close and your foes even closer'. Loyalties are being tested to destruction. If Britain were to be involved in a real war tomorrow morning, this is a government that is struggling to survive until the next General Election due to take place in May 2024 and that will not be capable of dealing with war at home and war abroad. What would a General Election in 2024 achieve? For starters, it could be change, even if it is change for change sake. Having said that, when you look at what is happening across the home nations, political realities are much too complex to be able to foresee what the outcome of a General Election would be. 

North of the border, at times it looks like the SNP will collapse. At times it looks like any expectations about the demise of the SNP are very much an exaggeration. In Wales, the Labour administration might be unpopular, but then people might decide to stick to what they have got for fear of worse political realities. In Northern Ireland, political paralysis is a reality with Sinn Fein winning spaces and without a cross party agreement to return to the Northern Ireland Assembly. In England, the mainstream political parties are fragmented depending on what are the most important issues according to regions.

There are far too many issues that generate divisions both in terms of national politics and of international politics. You cannot promise one thing to please one side without alienating another side and you don't have the luxury of being vague in terms of where you stand politically.

UK Happy New Year: The threat is that the New Year will bring more industrial unrest with foreseable and unforeseable consequences

If the Lockdown can be blamed for the loss of economic activity, endemic strikes will cause untold damage to a weak British economy and the chances are that inflation will then skyrocket with rates of inflation not seen for ages or ever happening in the United Kingdom. You cannot have a national budget in times of significant economic losses. How can you predict how much you are going to spend if the very same day in which you announce the budget the indicators used to calculate your budget have moved upwards. 

Put it this way. You plan to spend X amounts of Pounds for Health. Inflation will eat away whatever monies you invest in Health. If you say that you will invest 100 Pound and then inflation eats away 20 of the 100 Pound, the actual investment will fall from 100 Pound to 80 Pound. If inflation keeps going up and you end end up with an endless series of strikes with people demanding a series of increases just to keep up with inflation, whatever monies are given as increases will never be sufficient. You cannot go on borrowing indefinitely.  Other countries have tried to survive such a cycle and have ended up defaulting and Britain is not big enough not to fail. Given the size of the British economy, there isn't a single institution that could supply the amount of funding necessary to keep Britain alive.

No government could break such a cycle and the moment the country becomes literally insolvent we are going to lose many of the advances made in many areas including Health and Education. This has already been happening when you look at the number of vacancies that remain unfilled. Immigration will make a bad situation worse because the issue is management and not lack of resources and this is very much apparent when you look at other areas like Tertiary Education. If we keep pumping resources to produce things for which there is no demand then we are going to lack the necessary resources for things for which there is demand. The aim for many years has been to increase the number of those attending Universities without thinking about the kind of degrees we really need. The natural consequence has been rising student generated debt, degrees that end up in a drawer without ever been used in the real world and drop outs. The inconsistencies are pretty obvious but political correctness stands on the way of decision makers. As if this wasn't enough, those in charge of managing the budgets of education centres don't mind accepting students for courses for which there is no future as long as they keep getting funding.

We know that there are issues to deal with but there is no political will to deal with them and status quo sustains a permacrisis.

Strikes generate enormous losses for the economy by paralizing the country. As always, the ones who will suffer more because of strikes are the most vulnerable.

Working our way around strikes

In the end, we come to accept strikes as part of the food and parcel of everyday life in the United Kingdom. So, what do we do? We try to work our way around them and move on. Once again, waiting lists at the NHS and missed schooling days will happen not because of the lockdown measures impelemented during the pandemic but because of strikes of very crucial segments of the economy. NHS strikes? Patients without treatment. School strikes?

Students falling behind in their studies. Most British education centres were downgraded this year. No surprise there. It was bound to happen after what has been happening since 2020 and there is more to expect in terms of lack of schooling. Children at home or wandering around getting into trouble, parents struggling to manage between work and caring after their children and, if this wasn't enough, all those jobs prospects for their children getting farther and farther away because lack of schooling means lack of qualifications to have acces to job opportunities.

There is no leveling up if people don't have what it takes to get better jobs and it could well be said that strikes ensure that the new generations will miss opportunities in the medium term and long term. If somebody is making less than 20,000 Pound a year, we can understand that they need more to get by, but when somebody is getting 59,000 on average there is no justification to keep asking for more when the country is struggling with public debt out of control. Trade Union representatives said it themselves: trains drivers are getting 59,000 Pound a year on average. They are thinking merely about themselves and they are forgetting the hundreds of thousands that are not so lucky, the ones who are going to be harshly hit by transport strikes. No transport, no work when people need transport to go to work and especially when a day out of work means no income whatsoever. They say that politicians are out of touch with the rest of society. Well, high earning train drivers are equally out of touch with the rest of society and because of it society as a whole stands to pay a very high price for it.

Strikes hit the have-nots harder. Billions of pounds will be lost, taxes will not be collected, and social misery will spread faster than ever. With every year turning the Goodwill Season into a confrontation season the feel good factor evaporates. 

The expression Capitalism creates wealth and Socialism spreads misery is truer than ever before. Of course we must support decent incomes for all, but we must reject opportunists driven by greed that hide their greed behind legitimate concers to justify the unjustifiable. 

Strikes: winners and losers

 

Strikes: winners and losers

The coming months will see more strikes in Britain and this will include not only transport but also state administration, National Health Service, Education and other segments of the British economy. The idea is that workers want better deals to lose less of the value of their incomes being eroded by the inflationary process created by sanctions against the Russian Federation.

One of the outcomes has been the downgrading of the education system with most education centres having gone done in terms of education standards and there is more to come when teachers go on strike. To the damage caused by the Covid Pandemic will be added the damage caused by absenteism from classrooms caused by strikes. This is going to be also a difficult time for working families and many will face the dilemma of going to work, leaving their children alone outside schools or staying home to look after their families. This will also pose serious social risks. Having children without education and without adult supervision roaming around with little to do is certainly a recipe for disaster. 

We cannot entirely blame workers concerned about their incomes, but the very shortsighted approach of administrations that completely underestimated the impact of geopolitical decisions. Everybody with a grain of common sense could foresee that economic warfare would have repercussions not only for the British economy, but for the world's economy as a whole.  Even France with its nuclear power advantage is in dire straits as the vast majority of French nuclear reactors are not operational and this led to a direct confrontation between the French authorities and energy providers when French authorities tried to force energy providers to provide electricity at below operational margins. Similar situations occur across continental Europe and Winter has not even arrived. As temperatures fall, the true extent of the energy crisis will be felt and words like rationing and blackouts. Those who remember the early 1970's in Britain will know fairly well what it means. At one point, Britain was working three days a week. In Britain, temporary aid has been provided to help both ordinary consumers and companies deal with the brunt of energy prices but, unless such schemes are intended to be a permanent feature, sooner than later the real costs of energy will be felt across the board.

So what do strikes achieve? To begin with, those who are going to bear the brunt of strikes are going to be the most vulnerable and especially those who are part of the Zero Hour Contract economy and the black economy. With reduced economic activity, they are going to struggle to survive. Recession could soon be followed by Depression and we also what Depression means. In a recession, economic activity is severely affected but continues. In a Depression, the ultimate consequence is massive levels of unemployment. The hospitality industries - for example, were critically affected by lockdown measures during the pandemic. After that, they have had to deal with higher energy prices and many businesses came to an abrupt end. If now they to have to deal with higher energy prices and margins that do not cover their operational costs, for a vast number of businesses this will be the end game.

Any temporary gains will be followed by gigantic losses. In an economy with skyrocketting levels of borrowing, any salary increases will be swallowed by inflation.

UK: In just a few weeks, the British economy could be in the doldrums and much stronger leadership will be needed

 

What is happening right now is deeply worrying because the times of easy money could be coming to an abrupt end. The issue is not just rising inflation. The issue is that salaries and pensions have been pegged to inflationary pressures. 

At this point in time, asking for salary rises pegged to inflation could itself be a force towards more inflation and more borrowing when interest payments will be taking their toll on public finances.

And what if, as expected, the Treasury does not agree to salary increases that it could hardly afford? Would the state sector be ground to a halt? It is understandable that public workers that are seeing their incomes devalued are prone to ask for salary rises. Having said that, those in charge know full well that public finances have been drained and that any monies to pay for higher salaries will come from additional borrowing at a time when interest rates are going up and from an increase in taxation.

If energy is the main driver when it comes to inflationary pressures, then more energy will have to be produced and to do so all the promises in terms of a reduction of the use of fossil fuels will have be put aside. In the 1970s, Britain was almost brought down to its knees and the country was working just a few days a week. The issue was then energy or lack of it. Today, the issue is the price of it. Whoever takes the reins of power in September will have to make difficult choices. Doing less to save energy is not an option. Slowing down the British economy by enforcing energy savings will make matters a lot worse. 

We learnt from the imposed Covid lockdown leading to lack of economic activity that slowing down the British economy will cost livelihoods: businesses will be closed down and an undetermined number of jobs will be lost. Companies that generate little or no revenue at all have no reason to maintain jobs. Less economic activity endangers jobs and produces less tax revenues. If you slow down an aircraft in plain flight the time comes when the only way is down. We cannot have yet another loss of economic activity. We need energy and we need energy wherever we can find it. If foreign oil and gas producers don't want or cannot provide additional oil and gas, Britain will have to become self-sufficient and all options should be on the cards, including fracking.

Whoever is chosen as Prime Minister will have to make hard choices and implement decisions that will prove to be as unpopular as fundamentally necessary. Whether Rishi Sunak or Liz Truss is in command, he or she will have to forget about popularity contests. The popularity contest is only there to get one of them elected. Real governance demands dogged determination to do what is right.   

European Energy Rationing and strikes: Sanctions against Russian Federation benefit Russian Federation

 

Europe is shooting itself in the foot: sanctions against Russian Federation benefit Russian Federation

In the midst of a hot summer and talk about environmental crisis caused by rising temperatures leading to fires and meltdown snow caps, people can easily forget that winter will come and that when winter comes energy prices will not only hit the roof because of lack of energy sources. Winter will come with rationing and this will bring with it all kinds of unsavoury situations, conflict and most probably social and political unrest across Europe.

Before there was any talk about rationing, prices were rising steadily and utility bills were hitting consumers that are now going to be told that they not only will have to pay more more the energy they use. They will also have to face the certain possiblity of blackouts.

In Germany, head of industry, trade unions and politicians including the Deputy President of the European Commission are alerting about what is to come. Industries that have to pay higher energy costs and/or industries that are told that they will not have the energy they need to be able to function will face extremely harsh choices. If they decide to reduce operations or if they cannot obtain the energy they need to continue operating, the unavoidable consequence will be mass unemployment.

In Britain, the struggle has already begun. Strikes involving transport will be reinforced by strikes of public sector workers that demand salary rises to cope with galloping inflation. Any salary rises will drain even more an already exhausted treasury. Any loss economic activity will lead to economic losses and will threaten the stability of the British Pound. If the currency collapses, then there will be a double wammy. Britain will pay more for the energy it uses not just because of higher market prices, but because the parity with the US Dollar used to buy oil and gas will be less favourable.

The British government is aware that it will come the time when Britain will be paralized by strikes and this is why legislation is being put through Parliament to counter trade unions to allow agency workers to replace ordinary workers. The problem is that alienating ordinary workers is a leading cause to political and civil unrest and there might not be enough manpower to prevent street battles and widespread violence. By passing such legislation the authorities might be unwittingly creating two sides at war in the United Kingdom.

In the meantime, the witchhunt is already underway. British citizens that utterly disagree with UK policies regarding the Russian Federation are being hunted down and their assets are being frozen and there is even the threat of trials for crimes against humanity. Britain has been encouraging British mercenaries to get involved in the war to attack the Russian Federation, but does not like the fact that British citizens of their own volition actually support the Russian Federation.

Britain is at war with the Russian Federation and sooner than later Britain will pay a very high price for it and the same applies to most countries of the European Union. The idea that Europe and/or Britain can target the Russian Federation without any consequences for Britain and Europe is as naive as the words of Hermann Goering when he promised Adolf Hitler that German cities would never be bombed.

Europe and Britain will have to face the consequences, consequences that could be worse than anything conceivable or predictable. Europe and Britain are moving around with the same self-assurance the inhabitants of Hiroshima and Nagasaki had on the eve of the launching of two atomic bombs.

Just yesterday, both Conservative party contenders for the leadership of the Conservative Party were asked very simplistic questions about Britain involvement in Ukraine. Not even the journalists of the BBC have the brainpower to ask proper questions. The issue was not about sending or not sending the Royal Navy to the Black Sea. The issue is what will happen if Britain is formally involved in the war because sending the Royal Navy would be an act of war. The time for intimidation is gone because any additional actions will actually trigger a European conflict.

 

  

Russia is winning: Sanctions against Russia are hitting hard those who applied sanctions against Russia as inflation destabilizes economies

 

Transport strikes were the most visible indication that things are going south in the United Kingdom. Now there is the threat of other sectors of the economy like health and education going on strike and no sector is safe as the legal system is now being affected and people will have to defend themselves in court, including in serious cases that can lead to lenghty jail sentences.

This is not about Labour or Conservative. Whoever is in power the consequences of the economie going the wrong way due to energy prices and sanctions against the Russian Federation. European countries that rushed to implement punitive measures had little understanding of the dramatic consequences for their economies are now seeing the error of their ways and praying for no more energy cuts.

If inflation is more than 9% and the government in some cases is only willing to give a 3% salary rise, how are workers going to be persuaded to accept what is effectively a wage reduction? But those at work are not the only ones who will suffer. Pensions are somehow pegged to inflation rises and the question is how is this going to be dealt with. If you have got a state pension, you are going to be affected. If you have got a private pension, you are going to be affected. If you pension fund consists of investments in shares the obvious thought is that if the economy performs badly then investment returns will be lower.

Some Conservative politicians are talking about reducing taxation and cutting down or simply getting rid of VAT and there are those who say that green taxes that severely affect prices should be abolished. If the whole issue is so much depending on energy costs then the green agenda will be dead in the water. We have got to use every bit of fossil fuels we can get our hands on in order to lower energy prices. This means using coal and allowing fracking. 

RMT: if blood circulation stops or blood doesn't flow as fast as it should...

 

What do the transport strikes actually mean? 

Transport and communications are the blood of Britain. Without blood circulation the body stops, comes to an end, and this is exactly what is happening right now. After more than 24 months of economic and social activity in lockdown, lack of normal transport is another form of lockdown, but it has even more implications.

For ages, we have heard about protecting the environment by reducing CO2 levels. Well, if people are forced to used their own means of transportation including motor vehicles that consume fossil fuels, will there be more or less CO2? As the number of vehicles on the streets increases, traffic jams increase leading to delays and engines stuck on the streets, going nowhere and producing ever more CO2.

If you say that waiting lists in hospitals are too long, then transport strikes and the direct consequences of transport strikes are going to be ever longer with people having to cancel hospital appointments, delayed medical treatments leading to increase health risks and so forth.

Prices at the shops are rising and will rise even more if transportation costs increase affecting directly distribution of goods across the country.

In conclusion, this is not merely about the jobs and/or salaries of tranport workers. Every single family in the country will be affected by transport strikes in one way or another. The levels of debt are going to go up both in terms of private debt and public debt. Energy must be paid for. Time losses must be paid for and for many the outcome will be lost revenues.

The discusion regarding working conditions and working pensions is reaching the point when working conditions for workers will get worse and everybody will suffer. If the Mayor of London pushed by strikes has to divert funding used to maintain a bus network in the capital city, then working pensions might be protected but bus services will be lost affecting millions of peoples across the capital city. We have already reduced bus services across the capital city and any further reductions of the budget dedicated to bus services will mean loss of services. When future strikes of workers delivering undergound transport services and trains occur, people are going to have even less alternatives to meet their transport needs and the whole city would struggle not to come to a halt.

The London Authority was created to better manage developments in the capital city, added to the authorities that already manage 33 areas of the capital city, being in charge of fundamental projects to improve living conditions in the capital city, but no organisation can function without proper funding and this is what is missing. The added problem is that London is not just a city for Londoners. London is a key element in the economy of the entire country as the Southeast is the region of the United Kingdom that has the most powerful drive in terms of economics. If London comes to a halt, the country will suffer major consequences.

Unemployment in the United Kingdom has been falling steadily. Working conditions have improved although there are certainly some areas that need special attention to prevent economic exploitation that generates serious social problems. The slowdown of economic and social activity will mostly affect the most vulnerable in society. Strikes cannot be a long term solution. If the economy suffers, there will be even less funding for transport, more working hours will be lost, and most probably unemployment will start rising again debilitating the country as a whole. 

Going Underground: not just numbers, but actual families

 

We are used to hear about layoffs, so used to hear about layoffs that layoffs happen all the time and we are none the wiser about how they happen or even where they happen. What is even more odd is that we are not even aware of the real repercussions of the fact that people being laid off. We are not really aware of what is going Underground, under the ground of numbers and percentages we are being flooded with.

I guess that when you enter a bank branch - of the few that remain open compared to the numbers we had just a few years ago, or when you enter a local supermarket, you don't think about how many people have simply vanished from workplaces having been replaced by automation. You might think about how difficult it is to get a job or about how little people are being paid with salaries that will never allow them to climb the housing ladder, but you don't make the connection between automation and rising dispossesion. Somebody might talk about isolation, depression, anxiety, and so forth, but we seldom see the link between employment and many of the social illnesses, mental illnesses and physical illnesses. 

Most of us build our present and think about our futures taking into account how much we earn doing what we are doing. You make plans and suddenly you get the news that you no longer have a job. You no longer have what it takes to support yourself, to pay your bills, to save for that ever elusive future that you might never have.

Like an economics teacher of mine said 'don't forget that all those numbers, those figures, those percentages, those equations and formulae are real people'.