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The 1970s was a bleak time for the UK - are we heading back in that direction? City AM Editor-in-Chief Christian May discusses in this instalment of Week in Business.
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0:00
Do you remember the 1970s, the late
0:02
1970s? I don't, but I'm told that things
0:06
were pretty crap. Uh let's see how we
0:09
compare today. Welcome to the week in
0:10
business with me, Christian May.
0:16
So, 1978,
0:18
winter into early 1979, it became known
0:21
as the winter of discontent. A series of
0:24
of crippling public sector strikes, an
0:27
ailing economy, a Labour government in
0:29
crisis.
0:30
Uh things were pretty gloomy. Famously
0:33
rubbish uncollected on the streets, even
0:35
bodies going unburied, uh energy
0:37
rationing, fuel food shortages. Pretty
0:40
grim. Uh 1978 was also the year when
0:44
Ipsos, the polling and research company,
0:46
started asking British public how they
0:49
feel about things, particularly uh their
0:52
sense of economic optimism.
0:54
Now, just consider things that have
0:56
happened between 1978 and now, or
0:59
specifically early April, when uh Ipsos
1:02
asked this question again of the British
1:04
public. They've been asking every year
1:06
in that period. We've had wars, we've
1:08
had recessions, we've had pandemic, uh
1:11
we've had financial crisis. It is
1:13
therefore striking to consider that as
1:16
we
1:17
have to concede on our front page today,
1:19
um that Brits are at their most
1:22
economically uh gloomy since 1978.
1:27
Try and remember the figures. Um it's
1:30
something like well north of 70%, 78% of
1:34
the public expect the economy to get
1:37
worse in the year ahead. I think just 6%
1:39
think it's going to get better. That net
1:42
uh economic optimism score uh is the
1:45
worst it's been since 1978.
1:48
Now, let's keep things in perspective.
1:50
On almost every measure, life is better
1:53
today than it was in the winter of 1978.
1:56
And there is always going to be a sense
1:58
when you're asking people how they feel
2:00
about the economy uh or the country,
2:02
there there'll be quite a lot of a
2:05
dynamic we see a lot in sentiment
2:07
surveys of people who think, "Well, I'm
2:08
all right, but the country's going to
2:10
the dogs, so I'm going to say the
2:12
country's going to the dogs." And we do
2:13
see that in in business sentiment and
2:15
optimism surveys as well. A lot of
2:16
people are more optimistic about their
2:17
own circumstances than they are about
2:20
what they perceive to be everybody
2:21
else's circumstances or our collective
2:23
circumstances. And that's always an
2:25
interesting dynamic. But there's no
2:27
denying that economic optimism has been
2:31
declining
2:33
quite strikingly uh over the last couple
2:35
of years. Ipsos themselves point out
2:37
that dissatisfaction with the state of
2:39
things is pretty entrenched, uh it's
2:42
pretty embedded. Uh now, as I said, that
2:45
survey was conducted uh in, I think, the
2:48
second week of April, obviously at a
2:49
time of the heightened concerns around
2:52
the war in Iran. Uh but we can't just
2:54
assume that respondents to that survey
2:56
were simply influenced by that week's
2:59
bad headlines, because uh the public
3:01
aren't stupid, and they know what's
3:03
going on. They know that the tax burden
3:05
is at a record high, they know that
3:07
inflation is persistent and rearing its
3:10
head again. Of course, they know the
3:11
impact uh of the war in Iran, and they
3:14
know that growth, um perhaps at a GDP
3:17
per capita level and certainly at a
3:19
national level, is is pretty poor, not
3:21
where it should be, not where any of us
3:22
would want it to be. And so, they put
3:25
all this together, and they concede that
3:27
the country is going in the wrong
3:28
direction. And that is the sentiment
3:29
that we've picked out every month for
3:31
over a year in our own polling conducted
3:33
with Freshwater Strategy of voters here
3:36
in the UK. We saw yesterday the OECD
3:39
putting out a report on taxes on income,
3:43
taxes on wages across the 40 biggest
3:46
economies in the world. And those taxes
3:48
have increased the most in the UK. Uh
3:51
the Chancellor has increased taxation by
3:54
about 60 billion quid in her brief 2
3:56
years in office, and that has a
3:58
consequence. Uh we know the labor market
4:00
is not where it should be. I've talked
4:02
about growth. I talk about growth quite
4:03
a lot in this slot, don't I? Um and so,
4:07
we put all this together, and we have to
4:09
concede that there is a sense now um
4:12
that everything
4:13
uh is going in the wrong direction. Now,
4:16
a little bit of that is just kind of
4:17
good old-fashioned British pessimism,
4:19
but it can't be ignored, because it will
4:20
have a a couple of key consequences.
4:23
There will be a political consequence to
4:26
this. Uh incumbent governments will
4:28
suffer under these conditions, uh and
4:30
who knows whether it will be the left or
4:32
the right, or the fringes or the
4:33
insurgencies that benefit um from that.
4:36
We'll get a sense perhaps at the local
4:38
elections coming up. Um but there will
4:40
also be business consequences, because
4:43
this isn't just sentiment. Uh sentiment
4:45
is important, but it is based on
4:47
people's reality and their perception of
4:49
the reality. In business, that's about
4:52
confidence to invest, confidence to
4:54
expand, confidence to hire, confidence
4:56
to pay more. Uh and those are
4:59
suppressed. Um and so, there will be
5:01
business and therefore economic
5:03
consequences to this. It's the sort of
5:04
doom loop scenario that uh we really
5:06
don't want to see ourselves in. And I
5:08
just find it very depressing.
5:10
I just got back from a couple of weeks
5:12
in California. Now, people might have
5:14
all sorts of reasons why they don't like
5:16
America at the moment, or they wouldn't
5:17
want to live in America, or whatever it
5:18
might be, but there's no denying that
5:21
there's something in what Donald Trump
5:23
says when he says that we're the hottest
5:25
country in the world right now. There is
5:27
something um
5:28
almost always seems to be the case in
5:30
the American economy, in the American
5:32
condition. Maybe it was particularly um
5:34
noticeable in California. Um that there
5:37
is a dynamism there, an energy, for
5:40
sure. And you see it in the salaries um
5:43
of jobs that that in this country are
5:44
paid tens of thousands of pounds below
5:46
what they are in the US. Now, okay, you
5:48
could unpick uh the plusses and minuses
5:50
of of the American economic system or
5:52
corporate life in America, uh but it
5:54
just made me think that we we don't know
5:57
what it's like in this country. I've
5:59
certainly never known in my lifetime uh
6:01
what it would be like to live in a
6:02
country that's growing at, say, I don't
6:04
know, 3, 3.5% a year,
6:07
4%. Is that even imaginable? A country
6:10
where you feel like everything's
6:11
possible, country where you feel better
6:14
off as you progress through life,
6:16
country where the things that you want
6:19
are attainable, not given to you, but
6:21
attainable through hard work. All these
6:23
things are being eroded and chipped away
6:26
in this country. Now, that has been the
6:27
case for 20 years at least uh when you
6:31
look at um
6:33
prosperity, incomes,
6:35
etc. And that's it's a real problem. We
6:38
have to imagine what that would be like.
6:40
We have to imagine what it would be like
6:42
if there were fewer hurdles, if there
6:44
were more opportunities. And uh I I find
6:47
that quite distressing that that's the
6:49
sort of thing we can only dream of.
6:52
Maybe that's a little bit nebulous.
6:53
Maybe I'm in a slightly philosophical
6:55
mood. Maybe it's just the jet lag. Um
6:58
but whilst it's true that many, many
7:00
things are better now than they were in
7:02
1978,
7:04
the data
7:05
tells its own story. We recognize the
7:08
problems. The British public isn't
7:09
stupid. We don't have much faith in the
7:12
future,
7:13
and that's sad, and it will come
7:16
with a price, price that we're already
7:17
paying. Anyway, I'll try and lift the
7:20
mood next week, um certainly when my jet
7:22
lag has eased. But that is it from me
7:26
this week. Uh so, until next week, stay
7:28
up-to-date and in the know with the City
7:30
AM app and on cityam.com,
7:32
and I'll see you in a week's time.
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