We should brace ourselves for further strike action as economy flounders (Aaron Chown/PA)
(Picture: PA Wire)If you are having a difficult Monday — perhaps a first day back in from summer hols — I urge you to avert your gaze from the analysis of prospects for the UK economy published today by Saxo Bank.
It is a truly grim read. Titled ‘Emerging Market Britain’ it sets out why the gloomy headlines about the Bank of England’s prognostications last week told only half the story.
Sure the predicted recession will be bad enough — roughly comparable to the early Nineties slump — but unlike some previous downturns the exit will be slow and prolonged.
In three years’ time GDP will still be 1.75% below today’s levels. Which are themselves, of course, only just above the pre-Covid mark on the economic Plimsoll line.
Unusually, Saxo’s scribe, head of macro analysis Christopher Dembik, goes on to describe the potential social fallout from the economic chaos.
He rightly warns that the generation of workers now in their early thirties have already spent more than a decade facing suppressed wages and unaffordable housing. Throw in two years of socialising lost to Covid, soaring energy bills and rent with a lengthy recession still to come. It is a poisonous brew.
Perhaps worse, there is growing evidence that the poorest are faring far worst.
CEBR today revealed how the top 1% are keeping their noses ahead of inflation with pay rises averaging around 10% while the lowest earning decile manage only 1% .
Dembik says that the French would be donning the gilet jaune and heading for the streets in the same circumstances but that the British do not have the same appetite for mass direct action.
Maybe, but there is a more traditionally British response — old-fashioned strikes.
If Saxo is right the industrial action we have seen so far on public transport will be just the start.
