Mark Langabeer (Hastings and Rye CLP) reviews the recent Panorama documentary (here – shown 20-12-21) and asks “Will there be a slump?”
It’s customary to wish everyone a happy and prosperous New Year. Unfortunately, for most, it’s unlikely to be a prosperous one. A respected think tank, the Resolution Foundation, reports that 2022 will result in a cost-of-living crises. Prices, on average have increased by 6%. How many workers are receiving a pay rise of 6% or over to compensate?
Strike ballots
I thought that the pandemic would usher in a return to mass unemployment, similar to the early 80’s. In fact, the opposite has happened. Many industries are suffering from staff shortages. During the pandemic, the mood of most workers in my old job (I was a bus worker) was that we were fortunate to still be in a job. But since the end of lockdown, ballots for strike action have developed in all areas of the UK.
The Tories were fond of accusing Labour, (when Corbyn was Leader), of a return to the bad old days of the 1970’s if Labour had won in 2019: a period of high inflation and growing trade union militancy. But that’s exactly the period we have now entered! My former employer, Stagecoach, have amalgamated with the coach company, National Express, because they forecast a decline in passenger numbers, mainly due to on-line shopping and home working. The bosses are now bound to cut staffing levels, with the aim of restoring profitability.
Prior to the Christmas break, Panorama’s investigative reporter, Ellie Flynn reported that a new debt crisis is developing in the UK. Around 15 million people buy everyday items on-line, on a “buy now – pay later” basis. The advantage for buyers is that the loan is interest free. However, failure to pay the installments on time will incur fees. Flynn states that these loan companies secure a commission from retailers because they can increase sales by up to 40%. This industry is now worth £34 billion, with 90 million customers worldwide.
Glamorous lifestyle?
Iona Bain, a personal finance advisor, stated that Klarna, a Swedish based loan company, advertise a glamorous lifestyle that is aimed at young people. No credit references are required. One guy stated that he had debts of £10,000, but was able to secure £1500 on a “buy now, pay later” basis. A survey suggests that 43% of users have missed at least one payment, which can affect credit ratings in the future.
There’s one company, aptly called Zilch, which even provides a loan for grocery items. 25% of the weekly shop is paid and the rest is on installments. The retailers include most of the large supermarket chains. Unlike credit cards, these kinds of loans are not regulated and are fuelling a new debt crisis. According to Panorama, debt is now around £17,000 per person. Furlough and grants to businesses have prevented a return to mass unemployment. However, sovereign debt is at its highest level since WW2.
The Tories hope that sustained growth can solve the new debt crises. This is little more than wishful thinking. I think that a slump and a return of mass unemployment is likely in the next year or two. Only a socialist alternative can prevent this – public ownership of the banks and all the large companies, so that profits are pooled and allocated on the basis of need.
