Britain’s economic troubles

 

July 19, 2023

Prime Minister Rishi Sunak at a news conference last week.Pool photo by Henry Nicholls

Britain’s economic troubles haunt Rishi Sunak

Britain’s high inflation rate has come to symbolize the country’s deeper economic malaise, with debt ballooning and growth sputtering to a halt. Those woes may prove to be the undoing of Rishi Sunak, the prime minister, as he attempts to sell himself as the repairman for a broken Britain.

His challenges could become more difficult today when the inflation rate for June is announced, with analysts saying it could remain above 8 percent. That would put at risk one of the five goals Sunak set for his government: to cut the inflation rate in half by the end of 2023. His Conservative Party faces yet another test tomorrow with three by-elections looming.

Sunak, a former chancellor of the Exchequer and hedge fund manager, has cultivated a reputation as a technocrat and a problem solver. But his return to fiscal prudence has yet to reinvigorate Britain’s growth. And though inflation may yet drop significantly, Britain’s other problems, including its crumbling National Health Service, defy easy solutions.

Analysis: “Low productivity and low growth make economic policy challenging,” said Mahmood Pradhan, head of global macroeconomics at Amundi, an asset manager. “It reduces fiscal space. It’s a very tight straitjacket to be in.”

Squeezed homeowners: The Bank of England’s campaign to curb inflation is pushing up monthly mortgage payments for millions of people.

Cashing in: Rents are rising across Britain. The nation’s most famous landlord, King Charles III, was no exception. He received about $34 million from his real estate portfolio this year.