But Britain feels like something else. He really knows the cluster very well.
Starting with the oil crisis. There are 100,000 vacancies in the UK trucking industry. The COVID-19 pandemic meant that around 40,000 driving tests never took place, delaying the licensing of new drivers.
Another 20,000 European drivers have left Britain in recent years, some deterred by Brexit, others by blockades and border closures. And in the past 18 months, 50,000 UK licensed truck drivers have also retired or resigned, frustrated by poor wages and conditions.
The government has made tougher immigration rules since Brexit – especially for low-skilled or low-paid Europeans – but it has now accepted it was going to have to compromise its principles to help resolve the crisis.
Even so, 100,000 Europeans are unlikely to break their guts to get to Britain – at least, not without a decent enough wage offer. So even in the short term, the cost of trucking will increase.
And costs will remain high for as long as it takes to recruit and train a new generation of UK long-haul drivers, and to pay them enough to lure them out of their Amazon delivery vans.
It sounds like a little sticky inflation. And Bank of England localized surveys of businesses suggest this is widely felt.
The companies told BoE officials they expected driver shortages and rapid wage inflation to drive up transportation costs. And they’re willing to spit for higher prices if that means they avoid disrupting their supply chains.
Over a million job offers
This is not the only complaint from companies. They are in desperate need of staff and cannot find them, according to the agents’ latest report. “Demand for personnel was particularly strong in professional services, hospitality, logistics distribution and warehousing, construction and engineering.” Which is a big part of the British economy.
The official tally of job vacancies has passed one million for the first time since the records began. Accommodation and food services increased by 75%.
The unemployment rate, now 4.6%, is returning to its pre-pandemic lows. Statistics on wage growth are a bit unreliable at the moment, but it is generally believed that growth is strong.
Faced with higher costs, companies are trying other tricks to attract staff: “learning programs, hiring remote workers, increasing in-house training, investing in automation, streamlining product lines, increasing the hours of existing staff or redeploying staff and improving benefits and offering flexible work, âthey told bank officials.
Now there is an energy crisis to add to that. The six-fold increase in gas prices is hitting Britain particularly hard, as its nuclear power plants are operating sub-optimally, a power cable from France is down, and strange weather conditions mean the wind turbines are turning at a fraction of their normal. rate.
Global supply crisis
This does not immediately increase energy costs, as Britain only allows electricity providers to increase their maximum retail price once every six months, during a regulatory review.
The next increase will be in October, when prices rise by 12 percent; then in April is sure to come another blow – which the BoE says is “a significant upside risk” to its inflation projection.
Finally, there is the global supply crisis, caused in large part by the impact of the pandemic on shipping, production and demand around the world.
The semiconductor shortage, for example, has affected the production of new cars. This pushed customers into the UK used car market, where prices rose 18% in the year through August.
Add it all up, and it looks bad enough: Core inflation was 3.1 percent in August, the highest in a decade. And while it’s not sticky, it could still affect inflation expectations; as measured by Citi / YouGov, they are at their highest since 2013.
What should the bank do? He has to keep things from getting out of hand. Unlike the Federal Reserve and the ECB, it hasn’t averaged, so it can’t let things hang for long. And it must keep those inflation expectations anchored.
Most of the BoE’s rate regulators still believe inflationary pressures will pass. Interest rates will need to stay low to support demand and combat slowing economic growth.
But some argued last week that labor market pressures and even some of the supply constraints are likely to persist, keeping inflation high.
In the end, they decided to sit on their hands until November, and see if the picture gets any clearer.
The market began to factor in the interest rate hikes early next year. For the government of Prime Minister Boris Johnson, which may be just emerging from a “winter of discontent”, this will be bad news politically and bad news for its budgetary situation. In 2022, BoE Governor Andrew Bailey may not be the most popular person in Downing Street.