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Monday, 15 May 2017

Probability and Political Certainty

Today the Chartered Institute of Personnel and Development [of which I am a Fellow] has produced its latest forecast on living standards in the United Kingdom. Their survey of many thousands of employers predicts that earned incomes over the whole economy will rise by one per cent over the next year: the same amount as is promised to nurses, to their great distress: as revealed in their Conference over the weekend. The Institute notes that published forecasts of retail price inflation are running at around 2.6% for the year: so living standards are set to fall.

The relative strength of consumer demand over recent years - and during the months since the Brexit referendum - has been ascribed to some people being willing to spend some of their savings, and to many people increasing the amount they owe: mostly on credit cards. In the face of rising prices [largely due to the decline in the value of the pound against other currencies] it is generally expected that consumer demand will decline in the coming months. Since some of the most successful retail chains have already experienced falling demand [exemplified by Next] and it is expected that the coming winter will see even lower demand, that will quickly result in a fall in demand for shop workers. The Conservatives rely on assumptions of such slackening in the economy to assert with great confidence that Labour's proposals could not be afforded: even where they can be costed.

The Conservatives are being careful to make promises that will seem to cost the state nothing, beyond minor expenditure on bureaucracy and publicity. Thus they are promising massive benefits for workers, in the form of 'rights' such as the opportunity to take unpaid leave for up to a year to care for a relative, during which time their jobs must notionally be kept open for them. Mrs May is also promising that local authorities will be able to buy derelict sites more easily, on which to build homes for rent: but no money is being made available for such a programme. Various other desiderata have been identified that can be accomplished 'within existing budgets', and the government's spin machine will be emphasising the great benefits that the public will derive from such tinkering if the Tories get the expected 'mandate' from the people.

Mrs May's team are presenting her as the focus of a 'strong and stable' government, contrasted with the 'chaos' that they perceive in the Labour party hierarchy. The primary assumption is that a Conservative government, backed by a large Commons majority and with a set of ministers handpicked by Mrs May, can focus on the Brexit negotiations. This is a massive delusion.

There is every sign that the economy is on the edge of a precipice, with falling demand and a huge potential for disruption of firms and public institutions - not least, hospitals - by staff who will feel that they are goaded into drastic action after years of austerity. Brexit will be shoved further and further down the agenda as the economic crisis matures; and that will make it more essential for the government to accept the best terms that the continentals will offer them for a close trading relationship with the European Union. On the first full day of his Presidency of France, young M Macron is flying to Berlin, supposedly to tell Frau Merkel how he wants Europe to change: it is odds-on that he will return to Paris having been told firmly to learn a lot before he tells the continent's power-lady anything. But France and Germany will stay closely aligned on Brexit, and Mrs May will have to lump it.

As Noel Coward sung: "Bad times are just around the corner".

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