Politics has gone back to the Seventies. The biggest rail strikes for a generation and the highest inflation for 40 years, again driven by a hike in oil prices, have sent ministers scurrying to the history books for lessons. “How many of you actually remember the 1970s?” Boris Johnson quipped to his cabinet recently.
In his latest relaunch speech on Thursday, the prime minister warned: “If wages continue to chase the increase in prices then we risk a wage-price spiral such as this country experienced in the 1970s.” However, trade unions rightly argue that energy prices rather than pay increases are pushing up inflation.
Although ministers trumpet that vacancies exceed unemployment for the first time, workers are hardly enjoying a labour market miracle or the “high-wage economy” Johnson promised. Weekly earnings (excluding bonuses) grew by 4.2 per cent annually in the first three months of this year – a 1.2 per cent fall after inflation.
