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Zhuohuisi elected as British Prime Minister: 'Worst Prime Minister' meets the worst start

2022-09-05T12:36:05.079Z


The current foreign secretary, Liz Truss, has been elected as the new Prime Minister of the United Kingdom. Britain will welcome another female prime minister after Margaret Thatcher and Theresa May


The current foreign secretary, Liz Truss, has been elected as the new Prime Minister of the United Kingdom.

Britain will welcome another female prime minister after Margaret Thatcher and Theresa May, but the start in front of her is not much better than the two predecessors, and it can be said to be another level of danger.


British BBC date reported that Zhuohuisi is planning to issue about 130 licenses to British oil and gas companies to develop oil fields near the British Isles.

The purpose is to alleviate the British energy crisis, inflation rate, and solve problems such as skyrocketing British electricity, natural gas, and gasoline prices.

For this move, the British "Financial Times" commented that Zhuo Huisi did this in vain, because it will take 3-5 years at the earliest from mining now, to installing offshore oil equipment, and finally lifting the oil.

The Financial Times named her a contender for Britain's "worst prime minister".

Zhuo Huisi has not yet settled in No. 10 Downing Street, and already has signs of "worst prime minister".

To make matters worse, Zhuohuisi is also facing a worse start than Theresa May's handling of Brexit: how to lead the UK out of high inflation not seen in decades, and a worsening cost of living crisis.

Inflation in the UK hit double digits in July this year, electricity bills are high, and life for the grassroots is difficult.

(Getty)

Choosing between 'warming and eating'

The UK National Institute for Economic and Social Research released a forecast on August 3 showing that the UK inflation rate will soar to "astronomical" next year.

The '2022 Summer Economic Outlook' research report was released by the UK's National Institute for Economic and Social Research (NIESR).

The report predicts that rising gas prices and food costs will cause UK inflation to peak at 10.8% by the end of the year, while the retail price index used to set rail fares and student loan repayments could hit 17.7%.

In addition, the Bank of England will continue to raise interest rates, up to 3%.

It will take a year or so to return to the "normal" 2%, during which commodity prices will reach "astronomical levels."

Due to inflation, slow economic development and other factors, the research report predicts that by 2026, the real income of Britons will be 7% lower than before the new crown epidemic

British families are caught in the "electricity bill dilemma": one meal a day, switching to canned fruit, and cutting extracurricular activities

The latest UK inflation data for July hit double digits at 10.1%:


source: tradingeconomics.com

Consumer price inflation jumped to 10.1% in July, the highest reading since February 1982, making Britain the first major wealthy economy to record double-digit price increases.

However, this was not the worst time for inflation in British history.

During the oil crisis in the 1970s, the UK inflation rate exceeded 20% for a time, and the economic recession was accompanied by a phenomenon of "stagnant inflation" that economists were most worried about.

British public opinion has drawn comparisons between the UK today and the 1970s, when the country experienced one of its worst economic crises.

Inflation and prices have become the most important and most concerned issues in the current British economy.

According to Citi's estimates, the consumer price index in the UK is expected to exceed 18% in early 2023, and the retail price index inflation rate will even soar to 21%.

Goldman Sachs predicts that UK inflation may exceed 22% next year.

The reason why British inflation is higher than other developed economies is that factors such as Brexit and the devaluation of the pound are considered to be the driving force.

The picture shows that on August 23, 2022, British Conservative Party leader candidate Zhuo Huisi hugged and took photos with supporters at the venue before participating in the husting (campaign speech canvassing activity) in Birmingham (Birmingham).

(AP)

Brexit has exacerbated the already severe labor shortage and increased the operating costs of companies.

The weaker pound has also pushed up import costs.

The pound has fallen sharply against the dollar over the past year, increasing the cost of imported fuel and energy.

In addition, the UK-specific system that can adjust the energy price ceiling has also boosted energy prices.

The IMF said that Britain's inflationary shock was superimposed on labor shortages and the euro zone's energy crisis, so Britain's inflation problem was more intractable and more severe than any other major economy.

To make matters worse, UK workers are currently facing the worst wage cut.

On July 19, data released by the Office for National Statistics showed that compared with the same period last year, British workers' real wages fell by 2.8% from March to May this year, taking into account inflation.

This is the largest drop since the data began to be recorded in 2001.

According to the Bank of England's earlier forecast, the UK inflation rate will reach a record high of 11% before this winter.

After adjusting for inflation, the average Briton's wages are now even lower than they were in 2006.

Real inflation should be higher than that.

About 16% of UK households, or nearly 4.5 million, are currently facing "severe financial hardship", and about 20% are "struggling to get by", according to an analysis by researchers from Abton Financial Fair Trust and the University of Bristol. .

Britons are on track for their second-biggest drop in disposable income since records began in 1964, thanks to soaring energy and food prices, Bank of England data also showed.

"Over the next few months, we will see Britons in a life unseen in a generation, with the government's lack of a clear strategy and deep divisions, the risk of major policy mistakes is very high." Citibank analysis The teacher said so.

Annual inflation is approaching 10%, and unions are armed and threatening strikes.

Britons are facing their worst cost-of-living crisis in decades, with low-income families forced to choose between "heating and eating".

Closing crisis in British pubs or the result of the Conservative Party leader election a 'key to survival'?

Summer strikes come to the United Kingdom with high inflation, is it reasonable to add labor?

There is simply no room for significant tax cuts

Downside risks to the UK economy are increasing at the same time.

The Bank of England has acknowledged the risk of "stagflation" in the economy.

In May this year, the Bank of England warned that the UK faces a double risk of recession and inflation exceeding 10% this year.

As the world's fifth-largest economy, the UK economy has been in decline since the beginning of this year.

In February, the UK's gross domestic product (GDP) increased by only 0.1% month-on-month, almost stagnating; it began to shrink in March, down 0.1% month-on-month; in April, it fell for the second consecutive month, with GDP shrinking by 0.3% month-on-month, services, manufacturing For the first time since 2021, the three main economic sectors, industry and construction, all contributed negatively to UK GDP.

Although UK GDP unexpectedly rose 0.5% in May, UK GDP fell 0.6% month-on-month in June.

According to data released by the Office for National Statistics on August 12, according to initial estimates, in the second quarter of 2022, UK GDP contracted by 0.1% month-on-month.

Specifically, in terms of output, services output fell by 0.4% in the second quarter of 2022.

Output from production activities rose 0.5% in the second quarter of 2022, a slowdown from the 1.3% increase in the previous quarter, and output levels were still 1.2% below pre-pandemic levels.

The Confederation of British Industry's survey showed that the UK's total industrial orders gap fell from plus 8 to minus 7 in August, showing signs of a slowdown in the manufacturing sector.

According to Goldman Sachs forecasts, the UK economy (non-annualised) will shrink by 0.3% in the fourth quarter of 2022.

It will shrink by 0.4% and 0.3% in the first and second quarters of 2023, respectively.

The rising cost of living will push the UK economy into recession later this year.

The Bank of England, the Bank of England, also forecasts that UK GDP will fall into recession in the fourth quarter of 2022.

The economic forecast report also released by the British Treasury in June shows that the market forecasts that the UK’s GDP will grow by 3.6% in 2022 and 0.9% in 2023.

According to a Bloomberg survey released on July 12, 13 economists expect a 45% chance of a recession in the UK in the next 12 months, which is three times higher than the probability in the survey in early 2022.

In a financial stability report, the Bank of England said the outlook for Britain's economy had "significantly deteriorated".

The Organisation for Economic Co-operation and Development predicted last month that the UK economy would grind to a halt, with zero GDP growth expected in 2023.

Britain's economic performance will be "bottom" among G7 members next year.

Zhuohuisi: The picture shows that on August 17, 2022, British Conservative Party leader election candidate, Foreign Secretary Zhuohuisi attended a canvassing event in Belfast, Northern Ireland.

(Getty)

In the face of the British economy falling into recession and the worst inflation problem in decades, in fact, Zhuohuisi has been secretive, but advocated tax cuts immediately after taking office to stimulate the economy.

But in reality, weak UK growth has exacerbated the government debt crisis.

In order to help businesses and households cope with the epidemic and the energy crisis, the British government has taken many rescue measures, causing government debt to soar.

That means there is little room for the next prime minister to make big tax cuts or spending pledges.

Notably, she promised tax cuts while saying no cuts to public spending.

The main source of revenue for any government is taxes.

Tax cuts without cutting public services. In today's situation, where will the government's money come from?

Therefore, I have to suspect that Zhuo Huisi imitated Mrs. Thatcher to talk about tax cuts, but this series of measures are entirely for members of the Conservative Party.

Talking about economic policy is useless.

The latest information, the International Monetary Fund's (IMF) gross domestic product (GDP) data shows that in dollar terms, India's economy has surpassed that of the United Kingdom in the last quarter of 2021, and will expand its advantage in the first quarter of 2022.

That is to say, the size of the UK economy was surpassed by India and dropped to the sixth largest economy in the world.

This is a blow to the British government, which is struggling to cope with the inflation crisis.

Average weekly earnings growth in the UK has fallen since last summer:


source: tradingeconomics.com

The aftermath of "Brexit" is still a scar

The various crises caused by the new crown epidemic, the Russian-Ukrainian conflict and sanctions are certainly the decisive factors in restraining the UK's economic growth, but it must also be realized that the impact of Brexit is unique to the UK.

Economists predict that the trade barriers and labor shortages brought about by "Brexit" will make it more difficult for the UK to deal with high inflation and low growth than other advanced economies.

It must be seen that "Brexit" has left serious after-effects in the field of trade.

The UK has missed out on a lot of opportunities for a trade recovery since the pandemic.

Coupled with Johnson's breakup with the EU, the "Brexitists" have failed to fulfill their promises to promote trade after "Brexit".

For many businesses, the tariff-free trade deal between the UK and the EU signed nearly two years ago has led to a massive increase in customs paperwork, making it harder for them to sell to the EU's biggest export market, while also raising import costs.

In the context of shrinking foreign trade, the Johnson government has also tried to amend the "Northern Ireland Protocol" previously reached with the EU, and unilaterally initiated domestic legislation to cancel customs procedures for goods transiting between Great Britain and Northern Ireland.

This move not only undermines the existing trade institutional arrangements between the UK and the EU, but also damages the relationship between the UK and EU leaders, and may even trigger a new round of trade war with the EU.

These are issues that will have to be dealt with immediately after Zhuo Hui Si takes over as Prime Minister.

Zhuohuisi, in 2016, Theresa May appointed her as Justice Minister, and the following year as Principal Secretary to the Treasury; in 2019, Boris Johnson became Prime Minister and she was transferred to International Trade Secretary.

In this role, she will need to engage closely with political and business leaders to drive the development of the UK in international commerce.

As Minister of International Trade, Zhuohuisi said that British companies should be more active in grasping the new opportunities of global free trade brought by Brexit.

As international trade secretary, although Britain has yet to negotiate a free trade agreement with the United States, she successfully lobbied the Biden administration to lift some of the unilateral sanctions imposed on Britain under the Trump administration.

In less than two years, the United Kingdom has reached a free trade agreement with Japan and Australia, the two largest Indo-Pacific economies, and has begun negotiating a free trade agreement with India.

The first person to "distribute money" to fight inflation?

British Prime Minister's 'philosophy' of financial management

British Conservative Party Leader Election: The picture shows that on August 9, 2022, the British Conservative Party leader election candidate, British Foreign Secretary James Zhuohuisi (center), shakes hands with supporters before attending a canvassing event in Darlington, England.

(Getty)

But the UK Office for Budget Responsibility also said that although additional trade with other countries could offset the decline in trade with the EU, it has not seen a significant effect so far, so the future outlook remains unpredictable.

The U.K.’s balance of payments deficit soared to 8.3% of GDP in the first quarter of 2022, according to official U.K. data.

Fortunately, judging from Zhuo Huisi's speech, she has repeatedly said to the media: "The road to economic recovery lies in free trade and free entrepreneurship, not retreat and adherence to conventions."

She favors "Reaganist" free trade and opposes the unilateral sanctions imposed by President Trump on many allies, including Britain.

But, as foreign secretary, Tohhuis has attempted to address the thorny issue involving Northern Ireland by scrapping parts of the post-Brexit EU-UK deal, a move the EU has fiercely criticised.

Therefore, it will be a big test for her to talk about how to handle the relationship between the UK and the EU.

And this will have a decisive impact on the future development of the UK.

What is the current state of the UK economy?

In short, an extremely bad mess.

Workers in the UK went on strike one after another, directly reaching the largest scale in nearly 30 years.

The reason is very simple, reaching the highest price level in 40 years, making people unable to live.

Britain is facing a huge risk of civil unrest.

Whether it is Johnson or Zhuohuisi, just being smart and obsessed with votes will only make Britain more turbulent this winter.

The results of the British Conservative Party leadership election are released today. Xin Weicheng indirectly admits that he has lost the battle for the British Prime Minister's throne | Xinke first responds to the energy bill soaring two candidates "writing cheques" for the British Conservative Party leader election | Why do the British look forward to a Mrs Thatcher When the British Prime Minister takes office, how many early elections will Zhuo Huishi also "Xiao Gui Cao follow"?

How will Zhuohuisi deal with the sharp rise in energy bills after taking office?

Zhuohuisi plans to take immediate action on energy bills and energy supply within the first week of the new government after being elected as prime minister, and will introduce fiscal measures with the new treasurer later in September.

(See here for details)

How will Zhuo Huisi fight inflation after taking office?

Zhuohuisi plans to cut taxes immediately on his first day in office, and promises that there will not be any new taxes, including imposing a "windfall profits tax" on energy companies that are extremely profitable under high energy prices.

(See here for details)

Source: hk1

All news articles on 2022-09-05

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