Boris Johnson must beware of new winter of discontent with inflation, debt and union demands

IT was Larry Lamb who first used Shakespeare’s phrase to convey the sense of economic and political stagnation in 1970s Britain.

The legendary Sun editor declared a “winter of discontent” — a headline that came to define an era.

Boris Johnson is clearly more popular than 'Sunny' Jim Callaghan ever was

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Boris Johnson is clearly more popular than ‘Sunny’ Jim Callaghan ever wasCredit: PA

Fast-forward 40 years and there are clear signs we’re heading once again towards a 1970s-style moment of economic and political reckoning.

Society is becoming more fractured, as government debt and inflation escalate.

Shoppers and businesses regularly complain of shortages — a throwback to my youth.

Increasingly stroppy trade unions demand higher wages, just as during the 1970s

There are geopolitical echoes too, as Britain recasts relations with Europe and America stages a humiliating retreat — from Afghanistan, rather than Vietnam.

Today’s Prime Minister is on a winning streak, having won an election and delivered Brexit. He also led the country through a pandemic.

In the 1970s, a lack of leadership resulted in widespread strike action, economic chaos, and the breakdown of vital public service.

Voter outrage peaked in the winter of 1978/79, captured by Lamb as he wielded Shakespeare’s great phrase.

While Labour was in power then, and we’ve just seen a once-in-a-century pandemic, today’s parallels are stark.

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Just as the 1970s were marred by sky-high inflation, price pressures are once again stirring. The Consumer Price Index rose 3.2% in August compared to a year earlier, after inflation reached a nine-year peak.

The highest monthly increase in food prices since 2008 was 1.1% in August.

Last month’s average petrol price was 134.6 pence per gallon, which is an eight-year record.

Price pressures

The Bank of England now admits inflation could hit four per cent over the coming months.

Independent forecasters have predicted that inflation will rise to at least five percent by the year’s end.

Inflation at these levels can lead to spiralling prices, which could become a self-fulfilling prophecy like the 1970s.

When firms’ input costs start rising, they jack up consumer prices in anticipation, so they don’t lose out.

Such “supply chain” inflation is now rife, with input prices up ten per cent in July compared to a year ago and 11 per cent higher in August.

As inflation rises this autumn, if wages don’t keep up — and for many they won’t — workers will get angry.

Companies can be rattled by high inflation, and they may stop investing to support jobs growth.

That results in “stagflation” (inflation plus stagnation), another phrase evoking the 1970s.

Today’s inflation in part reflects lockdown, as previously shuttered producers get back up to speed.

But that doesn’t mean it won’t persist. Global shipping issues and the shortage of semi-conductors, among other components, are creating price pressures.

Inflation is also being driven by wage increases, which won’t be reversed.

The average pay rose by 8.3% between May and July. However, wage increases are a double-edged sword.

One person’s pay increase is another’s higher wage bill, which firms pass on to consumers. This causes inflation to rise and increases the cost of living.

There are more than one million jobs available in the UK, which is a sign of future inflation. This is because many firms have difficulty recruiting workers, especially in manufacturing, hospitality, and transport.

In the 1970s, unions covered over half of the workforce. Now, it is less than 25%.

However, in lockdown, medical and teaching Unions have grown more strident.

Over the past year, millions of patients have been denied in-person appointments — leaving countless life-threatening conditions undiagnosed.

Now, as the full horror of the record five million-plus NHS waiting list becomes apparent, doctors’ unions are still resisting a return to face-to-face normality.

Some teaching unions are still fervently committed to zero-Covid zealotry. They may even attempt to end a third consecutive school year.

Political reset

If that happens, today’s white-collar trade union militants could cause every bit as much public outrage as their 1970s blue-collared counterparts.

As the evenings draw in, two major questions are looming over the UK economy.

Although headline unemployment is low, the scheme could see many furloughed workers lose their jobs if they end this month.

This winter, unemployment could rise. Another throwback to 1970s.

Then there’s the question of broader economic stability, as this Tory government oversees mass-scale money-printing while racking up budget deficits that make Labour ministers of yesteryear look like paragons of virtue.

Margaret Thatcher, in late 1970s, was the catalyst for a radical political change.

Boris Johnson is clearly more popular than “Sunny” Jim Callaghan ever was.

There are signs that this government is taking the necessary steps in order to weather the harsh winter ahead.

The Prime Minister’s reshuffle has freshened up the Cabinet with new energy and ideas to face the tough challenges.

If any PM has what it takes to clear these hurdles, it’s BoJo.

But he should remember how suddenly the economic tide can turn and the electorate’s patience snap.

Unemployment could yet spike this winter just like in the '70s

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Unemployment could yet spike this winter just like in the ’70sCredit: bettmann
Inflation could spark another winter of discontent

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Inflation could spark another winter of discontentCredit: Alamy
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