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As Rishi Sunak delivered his speech to Conservative Party Conference today, he did so as an atypically popular Chancellor. Paying the wages of roughly nine million people through the furlough scheme will do that.
But as — we hope — the pandemic fades into the background, Sunak and the Tories face choppy economic waters.
Boris Johnson is pinning his hopes on higher wages. A lucky few with a HGV licence and who are willing to endure challenging working conditions will indeed enjoy bumper pay increases.
Yet real, sustained rises in the standard of living require not chronic shortages of labour or material but productivity growth, something at which Britain has performed poorly compared with other major economies since the global financial crisis.
He is right — our immigration policy should be evidence-based and responsive to the needs of the economy, not ideological. Otherwise, shortages in some sectors will simply feed through into higher prices, pushing up inflation.
This will in turn drive up the cost of living and may force the Bank of England to raise interest rates, placing greater pressure on government and household borrowing.
An Ipsos MORI poll for the Standard finds that the Conservatives’ rating for being concerned about people in real need in Britain hit a six-year low. With millions of households losing the £20-a-week pandemic boost in Universal Credit, rising energy bills and a national insurance increase in the pipeline, it is not clear how the Government can turn this around.
There are no shortcuts to higher wages and they certainly don’t come from blowing up supermarket supply chains, as one Tory MP suggested. Brexit has not transformed economic theory — it is still the hard graft of productivity gains and economic growth that make for a prosperous nation.