UK recession gravely affecting cost-of-living, extends throughout 2023

By Al Mayadeen English
Source: Agencies
3 Jan 2023 15:52

UK rail workers begin a 5-day strike alongside two 48-hour strikes involving 40,000 RMT union members at a time when a long-lasting recession looms over 2023.

UK railway workers' union begins 5-day strike (AP)

Rail employees in the United Kingdom disrupted Tuesday's return to work following the New Year holidays. This marked the latest strike action by workers across industries in response to the highest inflation crisis in a generation.

Workers across the economy are at odds with the government, demanding large wage raises to cope with decades-high inflation, which is presently running at about 11%.

Five days of strike action, commencing on Tuesday, involved two 48-hour strikes by around 40,000 RMT union members. Furthermore, on Thursday, the Aslef union will also go on strike.

In that context, Rail unions were urged to return to the bargaining table by Transport Secretary Mark Harper.

The Secretary noted that "The trade unions decided they wanted to go on strike this week, which is deeply unhelpful, damages the rail industry, damages the interests of the people that work in it," adding that "I want to see them back around the table and we can try and hammer out a deal between the employers and the trade unions."

Last year, Prime Minister Rishi Sunak told a watchdog MPs panel that "the best way to help them and help everyone else in the country is for us to get a grip and reduce inflation as quickly as possible."

Long, and difficult recession ahead

Due to the long-term inflationary consequences of the pandemic and turmoil in Ukraine, the UK will, according to a Financial Times report, experience one of the longest recessions and the worst recoveries among G7 economies throughout 2023.

The FT report cited renowned economists who stated that the UK would face a longer-than-most "inflationary shock" period. As such, the government will be forced to conduct a strict fiscal policy throughout the year.

Senior economist at Berenberg Bank, Kallum Pickering, told FT, "The combination of falling real wages, tight financial conditions, and a housing market correction is as bad as it gets."

According to the report, the UK economy is "unusually exposed" to a global spike in energy prices and interest rates since the country's demand for gas rarely equals storage capacity, and a substantial number of mortgage agreements will have to renew fixed-rate contracts.