I always try to be a bit upbeat in my new year message. But to do so risks being accused of trying to gloss over some real challenges. Most are economic, others quite specific.
Whilst a fair proportion of inflation comes from energy price volatility thanks to the Ukraine war, core inflation is running at around 6%. The Bank of England tackles this through interest rates, hiking borrowing costs to diminish the inflationary pressures. But that affects homeowners with mortgages. It is estimated that some two million people will come off fixed-term mortgages this year with an estimated £3,000 hike in annual mortgage costs.
Unusually, we have inflation at a time of economic contraction. Some estimates have us in a recession for the whole of 2023. Most inflation spirals happen at a time of economic overheating, which is manageable. This type of inflation – stagflation – is less so. But this is not just a UK problem – half the world is expected to be in recession this year. That is why strikes are hurting much more than they would otherwise.
Trades Unions are important and effective. But whilst they serve the interests of their own members very well, this often comes at a cost to the interests of other workers.
Train strikes, for example, starve the economy of workers and customers where they are needed. The hospitality sector has suffered so much, from pandemics to strikes. And if the transport strikers get their way, that hikes the inflationary cycle.
But the NHS seems to be suffering the most. A huge surge in ‘flu and covid hospitalisations, staggering numbers of patients fit to leave hospital but with no social care provisions available, combined with the normal winter surge, has left hospitals in a dire state.
It is a popular misconception that the NHS has suffered from austerity. In fact, it was specifically excluded from austerity and has seen a 39% increase in spending for England over the last 12 years. There are now more doctors and nurses in the NHS than before the pandemic. Here in Worcestershire, we have seen significant investment into all our acute hospitals.
So, 2023 is going to be tough. But my job is to make sure the Government is doing everything it can to mitigate the pain. But we need to get back to normal, where businesses can flourish and create wealth to pay for our valued public services.
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