On June 22, the Bank of England suddenly announced another 50 basis point rate hike, the 13th consecutive rate hike since December 2021. The bank also said recent inflation data showed upside risks, suggesting that the inflation process is more persistent than expected.
On the one hand, the government "violently raises interest rates", but on the other hand, inflation "does not recede". British Prime Minister Sunak has promised to halve inflation by the end of this year. But now, to the outside world, this goal is more like a gamble.
The British Guardian said bluntly: "The "shock" rate hike has shattered Sunak's commitment to reduce the cost of living. This also made Sunak, who had just got rid of the "chaos" in the party, once again fall into a "minefield".
The cost of living in the UK has soared
The Bank of England and the Conservative Party insist on raising interest rates
On June 22, the Bank of England announced a 50 basis point rate hike, raising the benchmark interest rate from 4.5% to 5%, the highest level since September 2008.
This is also the 13th time since November 2021 that the Bank of England has raised interest rates. A rate hike means that borrowers will have to pay higher interest rates.
Havani: I see that the mortgage payment bill is not £100 or £150 more than before, but almost double, or even more than double. It was up about £450, so I panicked when I saw that number. It's crazy, we have other bills besides our mortgage payments.
Rising interest rates could cost the UK's 1.4 million mortgage borrowers more than 20% of their disposable income, with around 690,000 of them under the age of 40, according to the Institute of Fiscal Research.
In May, a study by the Resolution Foundation, a British think tank, found that although interest rates are nearing their peak, only half of the households that are now affected are now affected, and even these households are currently feeling only one-third of the pain they will eventually endure.
Bloomberg Economic Research warns that if the benchmark interest rate continues to rise to the level expected by the 6%, the UK economy will face a sharp recession and massive job losses. But Bank of England Governor Bailey has hinted that they would prefer the UK economy into recession if inflation can be curbed.
Andrew Bailey, Governor of the Bank of England: We do not want a recession, but we will take the necessary measures to bring inflation to the desired target. To that end, wage growth cannot be maintained, and companies cannot seek to rebuild profit margins, because that would mean prices will continue to rise at the current rate.
Current British Chancellor of the Exchequer Hunt has also said he would accept a recession if it could reduce inflation.
British Chancellor of the Exchequer Hunter: Inflation is a source of instability. If we want to prosper, if we want economic growth, if we want to reduce the risk of recession, we have to support the Bank of England in making tough decisions.
The Conservative Party's insistence on raising interest rates has been criticized by the opposition
This drew opposition from the opposition.
Reeves, shadow chancellor of the Exchequer of the British Labour Party: This will bring more pain to ordinary working families. What governments need to do is give instructions to financial regulators to ensure that banks are properly serving customers.
However, according to the British "Guardian" report, British Prime Minister Sunak said that the government currently has no new support measures for those families who are still struggling to repay their loans.
During the parliamentary debate, the opposition Labour Party criticized the Sunak government's approach as pushing ordinary Britons into the abyss of "disaster".
Labour leader Starmer even coined a new term: "Tory (Conservative) mortgage penalty".
Labor leader Keir Starmer: The Tory mortgage penalty allows the average family to spend £2,900 more on their mortgage every year. Experts warned Sunak back in the fall of last year, but he either didn't understand, didn't believe it, or didn't care. Because he was sure that nothing [measure] was done.
Sunak, on the other hand, sneered at each other and played the shield of the global economic situation, prompting boos from the scene.
British Prime Minister Sunak: As always, my honorable gentleman does not understand the global macroeconomic situation.
In Starmer's view, the ruling Conservative Party has created an endless crisis for the British people and can be said to have lost control of the British economy.
British Labour leader Keir Starmer: 13 years of economic failure and the Conservative Party's suicide budget have caused the economy to collapse and mortgages to soar.
In October 2022, the 42-year-old Sunak won the British Conservative Party leadership race, becoming the first "Indian" prime minister in British history and the youngest prime minister in the United Kingdom in nearly 200 years.
During the administration of former Prime Minister Johnson, Sunak, as Chancellor of the Exchequer, won popular support measures, which made him the most popular member of Johnson's cabinet.
Sunak's appointment as prime minister is also seen as the Conservative Party's last hope to reverse the internal turmoil and decline of the party.
At that time, the New York Times commented that Sunak made history, but also faced severe economic difficulties.
Sunak's pledge: to halve inflation by the end of this year
British Prime Minister Sunak: Five commitments, we will halve inflation, halve inflation, halve inflation. My first task is to halve inflation.
In Sunak's view, bringing inflation back to 2% as soon as possible is the most important and absolutely correct economic priority.
Usually, too high inflation means that prices are soaring, currencies are devalued, and residents' consumption will be suppressed, which is not conducive to economic development.
In 1980, continued loose monetary policy in the United States caused inflation to climb more than 14%.
Reporter: Did you buy meat at the supermarket?
Consumer: No, it's too expensive.
In 1981, the Fed raised interest rates, pushing the benchmark rate to 19%, and inflation was suppressed, but other economic problems were caused.
President Reagan: Unfortunately, we are in the midst of the worst economic chaos since the Great Depression.
At the beginning of this year, Sunak promised to halve inflation by the end of this year and achieve economic growth.
However, the latest figures from the Office of Statistics show that while inflation has moved away from its peak and is now stuck at 8.7%, core inflation has actually risen to 7.1%, the highest level in 31 years, and prices for services, including dining, air travel and concert tickets, have risen by an average of 7.4%.
Prices of necessities rise Low-income groups in the UK are facing difficulties
With the rise in the price of necessities, life has become very difficult for low-income people in the UK. This group makes up 20% to 40% of the total population of the UK.
People in the UK Staple: Food prices are ridiculously expensive. For example, one day, we hadn't eaten ketchup for a month, and the kids said we wanted to eat ketchup, which was delicious with fries. But the cheapest ketchup I could buy was £4.50.
Staple is a single father who is unable to work full-time because he has to care for his three children and lives on welfare payments provided by the government.
To save money, Stapple takes the kids to the food bank every week for dinner.
Staple: This way I was able to save around £600 a month, which allowed me to remain solvent. If there is no food bank, our meals will suffer.
In December, more than 7 million people in the UK were deprived of basic necessities such as food and heating, and some 4.7 million were in arrears due to soaring gas and electricity prices.
McGranahan, founder of the food bank Daddy's House: About 60,000 to 70,000 families have registered with us. 40 to 50 families come to Daddy's House every day, especially due to the increased cost of living, which has led to a surge in demand for our work. It's really heartbreaking when you see a mom or dad struggling because they don't have the money to cook for their kids.
According to Bloomberg, about 89% of food banks in the UK said that more people have had to choose food banks this year than last year.
On the one hand, the number of low-income people is soaring, and on the other hand, the supply capacity of food banks is gradually declining.
McGranahan, founder of the food bank Daddy's House: We're not getting as many donations as we used to, and it's hard to keep supplies on a daily basis. Sometimes we have to use our own reserves to buy food and provide small subsidies.
Inflation is on the rise and strikes continue in the UK
The persistently sluggish economy and high inflation have exacerbated British dissatisfaction with the government.
Data shows that in the past year, there have been the most strikes in the UK since the 80s of the 20th century, from medical personnel to postal service workers and teachers.
Pope, a junior doctor in the UK: The only thing we can do is strike, and the only reason we can go on a legal strike is because of our wages.
Pope is a junior doctor in the NHS. In April, she took to the streets with her colleagues on a four-day strike.
The NHS was once one of the proud "national images" of the British.
However, since the end of last year, nurses and junior doctors in the British National Health Service have held several rounds of strikes, forming the largest wave of strikes by medical staff in the 75 years since the system was established.
High inflation has led to a significant shrink in real wages for healthcare workers, with around half of junior doctors saying their desire to work in the NHS next year is low or very low, according to Bloomberg.
Puber, a junior doctor in the UK: The NHS is under enormous pressure, with more and more people struggling and more and more people exhausted. Since I started working, I've often heard people say that one of their colleagues committed suicide.
From Johnson to Sunak, Britain's three prime ministers have been criticized
Seeing that 2023 is halfway through, inflation is still "high fever", and the outside world has begun to question whether Sunak can deliver on his promises.
British political commentator Preston: I think Rishi Sunak has failed, or will fail.
On June 21, in the British House of Commons, Sunak was "humiliated" by Labour MP Brennan.
Kevin Brennan, MP for the British Labour Party: One Conservative Prime Minister (Johnson) proved to be a liar, and another Conservative Prime Minister (Truss) was not even as long in power as the growth cycle of a lettuce. Which word would this prime minister (Sunak) use to describe himself, it may be "weak and incompetent".
According to the Daily Mirror, one of the reasons why Sunak was criticized by opposition parties as "weak and incompetent" was that Sunak abstained from voting on June 19 when the House of Commons voted on the final investigation report on the "partygate" scandal involving former Prime Minister Johnson.
Then-Prime Minister Johnson and some officials gather outdoors in the garden at 10 Downing Street on May 15, 2020.
And it was such a seemingly ordinary party that cost Johnson a lot. Due to the violation of the British epidemic prevention regulations at that time, he lost the prime minister's throne after the incident was exposed, and after that, the "partygate" scandal continued to ferment.
On June 15 this year, the Privilege Committee of the House of Commons of the British Parliament finally released the investigation report of Johnson's "partygate" incident. The report shows that Johnson not only "understood the epidemic prevention regulations" at that time, but also knew that government departments such as 10 Downing Street violated relevant regulations, but he still deliberately misled the lower house of parliament and the privilege committee with hypocritical "denial and explanation" many times.
And just a week before the report came out, Johnson abruptly announced his resignation.
At the same time, he claimed that he had been subjected to political persecution, a "witch hunt."
"I received a letter from the Parliamentary Committee on Privileges, and to my surprise it was clear that they had decided to use the proceedings against me to expel me from Parliament ..."
- Former British Prime Minister Johnson
He also used another special term in his official statement of resignation, "kangaroo court," alluding to unfair and unfair treatment.
"Their purpose from the beginning was to find me guilty, no matter what the facts were. This is known as the 'Kangaroo Court'. ”
- Former British Prime Minister Johnson
The list of awards is disputed Two British prime ministers are locked in a war of words
Two days after Johnson's resignation, on June 11, Sunak was also embroiled in a war of words with his predecessors.
At issue is Johnson's nomination for the Honours of his key political ally.
When Johnson resigned as prime minister last September, he had traditionally left a list of nominees, including baonesses, knights, etc., and those he wanted to grant to the House of Lords.
In accordance with established practice, the list will be submitted by the Government to the House of Lords Appointments Committee for review.
However, the final announcement of the list was missing several expected candidates, and the Johnson camp suspected that Sunak had "done the trick" before submitting it.
Sunak said Johnson's suspicions were "completely untrue." He also accused Johnson of asking him to overturn the House of Lords Appointments Committee that rejected Johnson's nomination to the House of Lords.
Prime Minister Sunak: Boris Johnson asked me to do things that I wasn't prepared to do because I didn't think it was right.
Johnson responded that Sunak was "talking nonsense."
The list sparked new infighting within the Conservative Party.
On June 16, Johnson, who resigned as a lawmaker, claimed he had found a new job.
Former Prime Minister Johnson: Hello everyone, I'm Boris Johnson and I'm delighted to be invited to write a column for the Daily Mail.
The Daily Mail is the most read newspaper in the UK. Some analysts pointed out that Johnson's return to his old business gave him the opportunity to express his views on the government and the current Prime Minister Sunak.
British political commentator Williams: Honestly, this is definitely a megaphone for him to lash out at Sunak. Over the next 12 months, he will be a thorn in the side of 10 Downing Street.
Johnson stared at Sunak like a behind-the-scenes "ogre", waiting for him to make a mistake before jumping out and playing the savior to solve the Conservatives' problems.
- Alistair Jones, Associate Professor of Political Science, De Montfort University, United Kingdom
There are constant problems within the British Conservative Party
The opposition gained the upper hand in the local elections
In fact, Johnson's sudden resignation also caused an "earthquake" within the Conservative Party.
On June 9, Johnson's staunch ally, former Culture Secretary Dolly announced her resignation as a member of parliament.
On June 10, Johnson's longtime ally and Conservative MP Adams also announced his resignation.
Farage, the former leader of the UK Independence Party, expects Johnson's resignation to trigger around 10 Conservative MPs to quit the Conservative Party, especially those in Labour's "red wall" constituency.
And just over a month before Johnson's resignation, on May 4, the Conservatives had just lost thousands of seats in England's local elections, which can be described as a heavy loss.
Based on the results of the local elections in England, the BBC calculated the national vote share of the parties, with 35% for Labour, 26% for Conservatives, 20% for the Liberal Democrats and 19% for other parties.
In this election, the opposition Labour Party won more than 500 seats. Labour expects this to be perhaps the party's best local election result since 1997. With that percentage of votes, the party could achieve its first time in 14 years in 2024.
In addition, the third largest party, the Liberal Democratic Party, in the United Kingdom, also gained a lot, winning two local councils in former Prime Minister Theresa May's constituency. Party leader David called them the biggest winners in this year's local elections, and next to him sat a huge clock dial with the words: "Sunak's time is up."
DVY, leader of the Liberal Democrats: I think it is a clear message that Sunak and his terrible Conservative government are coming to an end.
Embattled, Sunak asked the United States for help but was "snubbed"
Embattled inside and outside the party, Sunak flew to the United States for help.
On June 7, Sunak flew to Washington for his first "visit to the United States" since becoming prime minister.
During the two-day visit, he laid a wreath at Arlington National Cemetery and watched a professional baseball game.
Also met with US President Joe Biden at the White House. But Biden said the wrong thing with one mouth.
US President Biden: Mr. President, I just "downgraded" you. Mr. Prime Minister, it is a pleasure to have you back here.
Biden's "embarrassing" faux pas was caught by the media.
His "unfamiliar" past with Sunak was also turned over again.
In October last year, Sunak had just become prime minister of the United Kingdom, and Biden mispronounced Sunak's first and last name when he congratulated.
US President Joe Biden: Rasi Sanouk is now Prime Minister.
In April, Biden visited Northern Ireland and was picked up at the airport when the plane arrived in Belfast, the capital of Northern Ireland. And Biden rudely "pushed him away" and turned to talk to Lieutenant McCockle, the representative of the British king.
This scene went viral on social media, and some netizens ridiculed: "Does Biden think Sunak is the driver? ”
Even so, ahead of the visit, Sunak showed expectations for "rebuilding the special relationship between Britain and the United States."
During the visit, the United Kingdom and the United States jointly announced a transatlantic cooperation plan. Sunak called the two countries an "indispensable alliance."
However, in the opinion of the British iNews news network, in the absence of a comprehensive free trade agreement, this is just a "consolation prize" given by the United States to the United Kingdom.
The British "Guardian" also published a commentary that the Atlantic Declaration is more symbolic, marking Britain's shift from "unfettered free trade" to protectionism with the United States.
"It is an obvious strategic fact that Brexit would make the British prime minister less useful to Washington. Without his influence in Brussels, Sunak could not have made a deal with Biden. ”
- The Guardian
In April, the International Monetary Fund's World Economic Outlook forecast predicted that the UK economy would contract by 0.3% in 2023, making it one of the world's worst-performing major economies. Meanwhile, the British government plans to hold the next general election next autumn instead of spring, and Sunak hopes the Conservatives will have more time to win over voters. But as the Financial Times points out, Sunak's future is tied to the success of the Bank of England in curbing inflation. For him, whether he can face difficulties and reverse the economic predicament is the key to "lightning avoidance".
Source: CCTV News