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Boris Johnson: petrol crisis and pig cull part of necessary post-Brexit transition

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Boris Johnson: petrol crisis and pig cull part of necessary post-Brexit transition

Queues for petrol and mass slaughter of pigs at farms because of a lack of abattoir workers are part of a necessary transition for Britain to emerge from a broken economic model based on low wages, Boris Johnson has argued.

His comments, on the first day of the Conservative conference, came as Liz Truss, the foreign secretary, insisted it was the role of business, not ministers, to sort out such problems.

“I don’t believe in a command-and-control economy, so I don’t believe the prime minister is responsible for what’s in the shops,” Truss told a conference fringe event. “This is why we have a free enterprise economy.”

Speaking earlier, in a pre-conference TV interview, Johnson acknowledged that disruption to some supplies could continue until Christmas, but said the only short-term solution was to resume uncontrolled immigration, which would be wrong.

The Petrol Retailers Association (PRA) said on Sunday that the crisis was “virtually at an end” in Scotland, Wales, the north of England and the Midlands, but warned supplies were still not getting through to London and the south-east.

The prime minister refused to completely rule out further tax rises, saying he would not increase them further “if I can possibly avoid it”.

Asked about warnings of the imminent slaughter and incineration of up to 120,000 pigs because of labour shortages across the UK, Johnson initially argued that this was no different from what normally happened to livestock.

Speaking to BBC One’s Andrew Marr show, he said: “I hate to break it to you, Andrew, but I’m afraid our food processing industry does involve killing a lot of animals, that is the reality. Your viewers need to understand that. That’s just what happens.”

When Marr pointed out that it would be different, as in this instance the pigs would not be butchered for food and the farmers would receive no income, Johnson said this was part of a wider transformation of the economy post-Brexit.

“If I may say so, the great hecatomb of pigs that you describe has not yet actually taken place. Let’s see what happens,” he said.

“What we can’t do … in all these sectors is simply go back to the tired, failed old model, reach for the lever called ‘uncontrolled immigration’, get people in at low wages. And yes, there will be a period of adjustment, but that is, I think, what we need to see in this country.”

Asked whether labour shortages and the associated disruption they caused were an inevitable part of his Brexit policy, Johnson did not disagree. He said: “When people voted for change in 2016, and when people voted for change in 2019, they voted for the end of a broken model of the UK economy that relied on low wages and low skill, and chronic low productivity. And we’re moving away from that.”

Later on Sunday evening, Johnson partly blamed the lorry driver shortage on industry bosses making it an undesirable career for women, saying they did not want to have to sleep in a small cabin and urinate in bushes.

The prime minister suggested if more women had been attracted to the job, that would have helped make “a huge difference to our current situation”.

Speaking at a rally organised by the Women2Win organisation during conference, Johnson asked: “Why is it, do you think my friends, that it’s so difficult to persuade people to become lorry drivers and join the road haulage industry? Why should they join when you can’t even … you have to urinate in the bushes.

“I’m speaking frankly about this, why should you when you have to sleep in your cabin, that’s not frankly what women want. It’s ridiculous.

“That is the result of chronic, chronic under-investment in that sector of industry, chronic failure to deal with the issues, chronic mainlining of low-wage and low-skill talent rather than investing in equipment and investing in facilities and encouraging women to take part. That would have made a huge difference to our current situation.”

Chris Loder, a Tory MP, told a fringe meeting at the party conference that it would be a good thing for supermarket supply chains to “crumble”, even if it caused short-term problems.

Asked by Marr about a prediction by the chancellor, Rishi Sunak, that shortages of petrol and other goods could last months, to Christmas or beyond, Johnson initially refused to answer. Pressed by Marr, he said: “Rishi is invariably right. But it depends how you interpret what he said.”

Johnson said the issue was a long-term one, caused largely by the road haulage industry not investing in better pay and conditions and instead relying on the cheaper labour of drivers from Europe, now largely gone as a result of Brexit.

Johnson also defended his government’s tax rates after Marr said that with the highest taxation policies since the 1940s, he was less like Margaret Thatcher and more like Harold Wilson.

He said: “You’re talking total nonsense, because neither of those distinguished people had to deal with a pandemic on the scale we have. Neither of them had a fiscal meteorite hit their system on the scale that we had.”

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UK’s Truss defends economic plan that sent pound tumbling

UK’s Truss defends economic plan that sent pound tumbling

British Prime Minister Liz Truss on Thursday defended her economic plan and shrugged off the negative reaction from financial markets, saying she’s willing to make “difficult decisions” to get the economy growing.

In her first public comments since the government’s announcement of billions in uncosted tax cuts roiled markets and drove the pound to record lows, Truss said Britain was facing “very, very difficult economic times.” But she said the problems were global and spurred by Russia’s invasion of Ukraine.

She spoke after the Bank of England took emergency action Wednesday to stabilize U.K. financial markets and head off a crisis in the broader economy after the government spooked investors with a program of unfunded tax cuts, sending the pound tumbling and the cost of government debt soaring.

Truss told BBC local radio that “we had to take urgent action to get our economy growing, get Britain moving and also deal with inflation.”

“Of course lots of measures we have announced won’t happen overnight. We won’t see growth come through overnight,” she said. “What is important is that we are putting this country on a better trajectory for the long term.”

In a series of interviews, Truss said her government’s decision to cap energy bills for households and businesses would help tame inflation and help millions of people facing a cost of living crisis.

But it was not that decision that alarmed the markets. It was the government’s announcement on Friday of an economic stimulus program that included 45 billion pounds ($48 billion) of tax cuts and no spending reductions — without an independent economic assessment of the cost and impact.

The Bank of England warned that crumbling confidence in the economy posed a “material risk to U.K. financial stability,” and said it would buy long-term government bonds over the next two weeks to combat a recent slide in British financial assets.

The bank’s former governor, Mark Carney said that the government and the central bank appeared to be pulling in different directions.

“Unfortunately having a partial budget, in these circumstances — tough global economy, tough financial market position, working at cross-purposes with the Bank — has led to quite dramatic moves in financial markets,” he told the BBC.

The pound traded at around $1.08 on Thursday, above its record low of $1.0373 on Monday. It has lost some 4% of its value since Friday.

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Stimulus Packages Provided During Pandemic Triggered Inflation- CBN

The Central Bank of Nigeria (CBN) has attributed the rising inflationary rates to the stimulus packages provided to citizens during and after the pandemic.

It added that although this increased spending, it also created global supply challenges.

CBN’s director, Monetary Policy Department, Hassan Mahmoud, said this on Wednesday at a post-MPC briefing tagged: “Unveiling Facts behind the Figures’’.

The Monetary Policy Committee had on Tuesday, unanimously voted to increase interest rate to 15.5 per cent.

“A lot of households and small businesses were injected with stimuluses; the U.S did two trillion dollars, Nigeria did about five trillion Naira, these increased the ability of people to spend.

“But the supply side could not meet up with the demand because that volume of injection was far more than the regular intake for those economies, this made prices go up,’’ he said.

Mahmoud also blamed the Russian-Ukraine war, as well as the resurgence of COVID-19 in China for the rise in global inflationary trend.

“That region accounts for more than 50 per cent of global commodity supply and 38 per cent of global oil and gas supply. The war resulted in some shortages which made prices go up.

“Then the COVID-19 lockdown in China. The country is the largest importer of commodities across the globe,’’ he added.

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China’s yuan slides to 14-year low against US dollar

China’s yuan slides to 14-year low against US dollar

China’s yuan fell to a 14-year low against the dollar Wednesday despite US central bank efforts to stem the slide after U.S. interest rate hikes prompted traders to convert money into dollars in search of higher returns.

A weaker yuan helps Chinese exporters by making their goods cheaper abroad, but it encourages capital to flow out of the economy. That raises costs for Chinese borrowers and sets back the ruling Communist Party’s efforts to boost weak economic growth.

The yuan fell to 7.2301 to the dollar, its lowest level since January 2008. One yuan was worth about 13.8 cents, down 15% from its March high.

The yuan has exceeded expectations it might fall to 7 to the dollar after the Federal Reserve started aggressive rate hikes to cool inflation that is at a four-decade high. The Fed has raised rates five times this year and says more increases are likely.

By contrast, the People’s Bank of China has cut interest rates to boost growth that fell to 2.2% over a year earlier in the first six months of 2022 — less than half the official 5.5% target.

The yuan is allowed to fluctuate up or down 2% from its starting price each day in tightly controlled trading. That prevents big daily swings, but down days can add up to a big change over time.

To shore up the exchange rate, Beijing cut the amount of foreign currency deposits Chinese banks are required to hold as reserves to 6% from 8% as of Sept. 15. That increases the amount of dollars and other foreign currency available to buy yuan, which should push up the exchange rate.

Still, that reserve cut is unlikely to stop a slide that is driven by “a strong U.S. dollar and the expectation of more Federal Reserve hikes,” said Iris Pang of ING in a report.

“Less aggressive rate hike talk” might help the yuan rally, but it might weaken further “if the Fed maintains its very hawkish tone” into next year, Pang wrote.

Chinese officials have previously promised to avoid “competitive devaluation” to gain an advantage in trade.

The yuan sank in 2019 during trade tension with then-President Donald Trump. That prompted suggestions Beijing was trying to reduce the impact of U.S. tariff hikes, but there was no official confirmation. The currency later strengthened.

Other governments also are struggling to manage capital flows under pressure from Fed rate hikes. On Friday, Vietnam’s central bank raised a key interest rate in what economists said appeared to be an effort to stop an outflow of money in search of higher returns.

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