PETER HITCHENS
I fear we’re heading for another crash
THE British economy today resembles a clown on a unicycle, wobbling across Niagara Falls in a high wind on a tightrope, carrying a tottering burden of dead refrigerators, umbrellas, saucepans and budgerigar cages. It is amazing that it does not tumble into the abyss, amid clattering noises and shouts of dismay. Each morning I wake up and the cashpoint machines are still working, I mutter my thanks that we have lasted a little longer.
I am not sure who I am thanking. I think it doesn’t crash because everyone who understands the position is quietly hoping that something will turn up to save it. But what if nothing turns up? Are we remotely ready to cope?
Her Majesty the Queen famously asked after the 2008 crash why nobody saw it coming. Almost anyone, even me, can see the next one coming.
The International Monetary Fund pointed out on Wednesday that Britain’s liabilities, from unpayable debts to gigantic public sector pension commitments, outweigh its assets by five trillion pounds to three trillion pounds.
That is to say, if they called in the bailiffs, and sold everything we have, we would still be two trillion pounds short.
This is partly because the British State has sold off so many of its assets already, so that water supplies are now owned by a foreign bank, and your privatised train is run by a foreign nationalised railway system. Presumably there’s some sense in this somewhere, though I can’t see what it is. At this rate, my local police force will end up being owned by the Kremlin and controlled by the GRU. And frankly, I’d be amazed if they do a worse job than the current management.
This sort of wild crisis level of debt can just about be tolerated in wartime, but I do not think we have suffered it in peacetime before. I don’t think it even includes the slopping ocean of private borrowing, which for most people is the only way they can afford the standard of living they were once used to, but now can’t afford on their shrinking pay. We are, in every way, a lot worse off than we were when the last crisis hit us in 2008.
But here’s one cause for comfort. The IMF praise us for at least being more honest than some countries about how bad things are. That’s nice. But it doesn’t really help.
My problem is that I can actually imagine it going wrong, all too easily. In 1990s Moscow, I saw repeated waves of catastrophe striking Russia’s middle classes, their savings wiped out, their welfare state, such as it was, shrivelling to nothing, their pensions evaporating. It was awful. People had to sell their belongings on the street to buy food.
But Russians are very tough, and they survived, as they still do, as ghosts of their former selves.
Let us hope it does not come to that, and the wobbling clown makes his way safely to the other side, against all the odds.
In the meantime, in between the crisis and the catastrophe, we may as well have a glass of champagne.