Boris Johnson has denied the UK is facing an economic crisis, insisting that supply chain disruption and rising prices were the “stresses and strains you’d expect from a giant waking up” after the coronavirus crisis.
The prime minister, who makes his keynote speech to the Conservative party conference in Manchester on Wednesday, said he would not allow “uncontrolled migration” to resume, adding the country could cope as winter approaches.
Johnson also said only 127 truckers from the EU had been identified by industry as ready to work in Britain under the government’s new visa scheme to replenish garages after a shortage of lorry drivers and panic buying by motorists drained them of fuel.
Retailers have warned of gaps on supermarket shelves in the run-up to Christmas because of the shortage of heavy goods vehicle drivers, and a closely watched business survey published on Tuesday showed that supply chain disruption was continuing to hit the economy.
Shortages of staff, raw materials and transport resulted in lost business opportunities in the services sector in September, and the slowest pace of new order growth since March, according to the IHS Markit purchasing managers survey.
The supply chain disruption put a “considerable brake” on the UK services industry, said Tim Moore, economics director at IHS Markit.
Asked by the BBC if there was an economic crisis, Johnson replied: “No, on the contrary.” He added that, rather, it was “an extremely interesting moment” for the UK.
Johnson’s insistence the country is not facing a crisis will inevitably draw comparisons with Labour prime minister James Callaghan’s claim during the 1978-79 “winter of discontent” that the rest of the world did not see “mounting chaos” in Britain.
Then, inflation was running at about 10 per cent and economic disruption was far greater than it is today. Callaghan never actually said “Crisis, what crisis?” but the newspaper headlines capturing the essence of his remarks stuck. Consumer price index inflation rose to 3.2 per cent in August, according to the latest official data.
Conservative MP David Morris has made comparisons between the UK’s current situation and the winter of discontent after the fuel shortage, but Johnson insisted that hauliers and supermarkets would cope. “We are world leaders in logistics,” he said. “They will start to fix it.”
Johnson suggested the road haulage industry was partly responsible for its own problems, arguing it had not “put money into truck stops, conditions and pay”.
He pointed out that there was a global shortage of HGV drivers. “It’s a fascinating illustration of the problem of the shortage,” the prime minister added.
The government has made 300 short-term visas available for foreign lorry drivers.
Johnson also said labour shortages in some industries would force employers to improve salaries and working conditions. “Businesses have been able to mainline low-cost migration for a very long time,” he added.
He rejected suggestions by Lord Simon Wolfson, chief executive of Next, that businesses were best placed to decide on the level of immigration needed to plug labour shortages.
“I think that approach has extreme limitations to put it mildly,” he said, shrugging off Wolfson’s suggestion that “raising nominal wages can only result in a 70s-style inflationary spiral” if workers were not available in sufficient numbers.
Johnson, meanwhile, said companies should pay their workers more, removing the need for the taxpayer to top up wages through the universal credit welfare benefit.
“What’s wrong is to take more money in taxation to subsidise low pay,” he said. “Organically business and industry should be paying people a little bit more to help them.”
Source: Economy - ft.com
