Almost Nothing Seems To Be Working in UK

The Economist headline: Almost nothing seems to be working in Britain. It could get worse

Sub-headline: A warning from the hot summer of 1976

Inflation is what keeps people tossing and turning today. Consumer prices rose 9.4% in the year to June, driven in part by wholesale energy markets. The government has so far opted to help mostly by providing grants to households, with additional benefits for the poorest—a contrast to countries such as Germany, which have slashed fuel duty. Britain’s approach is better targeted and does not incentivise energy use as much. But it makes for scarier headline figures. Energy-price inflation in Britain stands at 57%, compared with 42% in the euro area, according to the oecd, a club of mostly rich countries.

A wide range of goods have become more expensive. The price of milk (a favourite question for interviewers who want to discover whether a politician has his or her ear to the ground) rose by 21% in the year to June. As some products rise in price, others shrink in size. The Grocer, a trade publication that tracks such things, finds that own-brand ready meals at Tesco, Britain’s largest supermarket, have shrunk from 800g to 750g and from 450g to 400g.

Industrial unrest is spreading as workers attempt to keep ahead of rising prices, or at least to ensure that they do not fall too far behind. In 2019, the last year for which official records exist, 234,000 working days were lost to labour disputes. Railway workers alone could drive this year’s figure higher. More than 40,000 walked out on June 21st, in the first of a series of ongoing stoppages. The Royal College of Nursing is balloting its 465,000 members about a strike, which would be the first in its history.

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Much worse than that. A major drought has dried up grass and hay crops. Feeding livestock through the winter could be costly or impossible. Milk prices will skyrocket. Much beef will go to market to give temporary lower prices followed by a major shortage. Eggs will be expensive. (Bird flu?)

I saw a Europe program on PBS pointing out that diesel fuel prices have tripled making it unprofitable for fishermen to run their boats. So most fish are now imported (in Italy).

And then Brexit. And all the effects of the Ukraine war on fuels, grains, and even sunflower oil for fish and chips.

And then we have Scotland planning to leave the Union to join EU. And the border problem in Northern Ireland.

If you have a UK etf, could it be time to sell it short.

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Here you go, Paul, add this to British Agriculture problems: lack of workers:

Bloomberg headline:UK Worker Shortage Leaves £60 Million of Food to Rot in Fields

:pushpin: Lack of workers to harvest fruit and vegetables, survey shows

:pushpin: Crops are wasted as cost-of-living crisis hurts households

While many parts of the economy lack staff, the farm industry often finds it particularly difficult to lure workers as jobs are seasonal and can mean long hours of physical labor at relatively low pay. Brexit has also complicated recruitment from the European Union. Thousands of pigs have been culled on British farms since last year because of staff shortages at meat plants.

The wasted food also comes as the UK recorded its driest July since 1935, further crimping production.

Some 40% of respondents in the NFU survey said they suffered crop losses due to a lack of workers, and growers expect production to drop another 4.4% next year. British fruit and vegetable output was valued at about 2.7 billion pounds in 2020.