Empty shelves are seen at a supermarket in Manchester, England, on Wednesday.
(Jon Super/Xinhua/Getty Images)
Rising energy bills, higher prices and a critical shortage of workers leading to food and fuel supply constraints are threatening to stall Britain’s recovery from the pandemic.
The crises afflicting the UK economy have sparked talk in newspapers and among politicians of a looming “winter of discontent,” a reference to the wave of strike action in 1978-79 that brought the British economy to its knees. There’s even talk of stagflation, the nightmare combination of stagnant growth and high inflation.
Although shortages, supply chain delays and rising food and energy costs are affecting several major economies, including the United States, China and Germany, Britain is suffering more than most because of Brexit.
Specifically, the form of Brexit pursued by the UK government — which introduced stringent immigration policies and took Britain out the EU market for goods and energy, making it much harder for British companies to hire European workers and much more costly for them to do business with the country’s single biggest trading partner.
It didn’t have to be this way — there were other options for a future EU-UK relationship. Worker shortages, for example, were not an inevitable outcome of Brexit, nor was going it alone on energy. But in Prime Minister Boris Johnson’s ideological rush to “get Brexit done” amid fraught negotiations with the European Union, agreements in several crucial areas, including energy, were sidelined.
The UK government’s post-Brexit immigration system, meanwhile, was designed to reduce the numbers of unskilled workers coming to Britain and end what the government described as the country’s “reliance on cheap, low-skilled labor,” despite a domestic unemployment rate in the region of just 5%.
“Ultimately, the government made a political decision to make low-skilled immigration more difficult,” said Joe Marshall, a senior researcher at the Institute for Government, an independent think tank. “Labor shortages may have been less severe if the UK had retained free movement of people post-Brexit,” he added.
Britain had a record 1 million job vacancies between June and August, according to the Office for National Statistics. Restaurants, pubs and supermarkets, including Nando’s, had to temporarily close some locations last month due to staff shortages or because certain ingredients weren’t delivered as a result of fewer truck drivers.
Supply chain constraints exacerbated by Brexit means that UK consumers are facing surging food and energy bills at the same time that pandemic support measures are being unwound, including government support for wages and a 20-pound ($27) weekly uplift to social security payments.
This week the UK government was forced to partly back track on its stringent post-Brexit immigration policy after thousands of gas stations ran dry over the weekend and food retailers warned that the country had just 10 days to “save Christmas.”
In an interview with broadcasters on Tuesday, Transport Secretary Grant Shapps acknowledged that Brexit “no doubt will have been a factor” in contributing to the fuel supply crisis.
To ease the pressure, the government will issue temporary visas to 10,500 foreign truck drivers and poultry industry workers. But industry groups say the measure won’t make much difference, in part because it’s unclear whether EU workers want to come back to a country that’s become more hostile to their presence.
Read the full analysis here.