Hi Patrick, today an opening demonstration is being held in London to protest against the high food and energy prices. Who organizes the manifestation? And will there be more?
‘The manifestation is part of the cost of living campaigncalled ‘Enough is enough‘ (Enough is enough). The movement grew out of trade unions and part of the Labor Party, especially supporters of the socialist Jeremy Corbyn.
‘Protests will take place across the country in the near future, about fifty in total. The rising cost of living is an increasing problem in England. The sharp rise in energy prices in particular is an issue here. But daily products such as milk, bread and other foodstuffs have also become considerably more expensive due to inflation. Of course, that mainly affects people with a lower income.’
You make a report about Britons who can no longer make ends meet because of the increased costs. Is there really a ‘crisis’?
‘I have recently been on the road in Northern England and I have seen that there is certainly a crisis. I have spoken to people whose expenses are now higher than their income. These people are dependent on the help of friends and food banks. At the moment food banks are very popular in England, more than 2 million people use them. In 2008 that number was still around 25 thousand. In addition to the crowds, food banks suffer from the fact that they receive fewer donations, because people who normally donate can now miss less.’
In July inflation in the United Kingdom rose to 10.1 percent, the largest increase in 40 years. There is high pressure on the British cabinet and the Bank of England to take action. What can they do?
“On August 4, the Bank of England raised interest rates by 50 basis points, which is a historic move. It is a classic way of fighting inflation, but it has also been perceived in society and politics as a panic measure. By raising interest rates, you risk increasing inflation further. It will take months before the effect becomes visible. So households that can’t get by now, in any case, have not been helped. The unions, which are campaigning, want wages to be raised. However, the government is wary of this, because that measure could also lead to higher inflation.
“An additional problem is that England doesn’t really have a functioning government at the moment. Johnson is on vacation and will soon be saying goodbye, and the election campaign is still ongoing. England is, as it were, in limbo. It is almost certain that Liz Truss will be the next prime minister. She continues to insist on tax cuts, purely to keep the economy going. There are no minimums now either. In general, tax cuts benefit people with higher incomes, not people living on the edge.’
Across Europe, the war in Ukraine has led to high inflation. Why does the impact seem greater in the UK than in other European countries?
‘Inflation in the Netherlands was even slightly higher last month, at 10.3 percent. The difference with other EU countries is that England has fewer protection mechanisms for people who have difficulty making ends meet. Over the past twelve years, since the Conservatives came to power, social security has been cut structurally. This makes people with a lower income extra vulnerable to a crisis like this.
‘French and German governments are taking more active steps to limit the suffering of lower income groups. For example, French customers of the French energy company EDF pay two and a half times less than British customers. And in Germany, the government has lowered the prices of public transport. In England, the government does relatively little to limit the damage to people. You have a fairly right-wing government here, which is less likely to intervene in free market forces.’
The Bank of England predicts that inflation will rise further, to 13.3 percent in October. Are the problems only getting worse?
‘We are only at the beginning of the crisis. It will get worse in the run up to winter. At the moment, energy prices are still being kept relatively low by the government, but the price ceiling will be released on 1 October. Then energy prices will rise sharply again, which will hit many people in England hard. The risk of an economic recession is also quite high. It would be the first since the banking crisis of 2008. We are going to have a rough time in England anyway.
An action has been set up called Don’t Pay UK, calling on people to stop paying their energy bills from 1 October. The campaign, which is being organized by activists, is in fact a call for civil disobedience. The organization is trying to collect 1 million signatures, they now have just over 100 thousand. A similar move took place in the 1980s, when Margaret Thatcher wanted to implement a particularly unpopular tax measure that was unfavorable to lower incomes. At the time, this resistance indirectly led to the Thatchers fall. Within the Labor Party there is certainly support for the Don’t Pay UKaction, in the hope that the same will now happen to the incumbent Conservative government.”