Editorial: Grim echoes of 1970s
FOR those old enough to remember the 1970s, there have been some worrying echoes recently of the economic and political turmoil that defined that decade.
A global energy crisis with talk of blackouts and rationing. Russian aggression and fears of nuclear conflict. Rubbish piled on streets amid growing industrial strife.
The period will also be remembered for a sterling currency crisis, when markets lost confidence in the British government's ability to manage its finances.
The parallels today are striking, with the roots of that crash also to be found in a disastrous Conservative Party budget with the stated aim of kick-starting growth.
In 1972, Chancellor Anthony Barber unveiled dramatic tax cuts paid with government borrowing which sparked a brief boom but helped drive inflation above 20 per cent.
In the end Britain had to go cap in hand to the International Monetary Fund to borrow billions to avoid the economy going bust.
Early yesterday the pound fell even lower against the dollar than at any time during the 1970s as markets gave their verdict on Kwasi Kwarteng's £45bn package of tax cuts.
Sterling was even approaching parity before regaining some ground as the Treasury and Bank of England were forced to issue statements in an attempt to reassure investors.
A weak pound means commodities priced in dollars, including oil and gas, are more expensive to import, putting further pressure on inflation.
The Bank of England will now most likely have to raise interest rates further and faster than planned to rein in rising prices.
This could mean thousands of pounds being added to annual mortgage payments. Coming during the worst cost of living crisis in generations, it will simply be beyond the means of many.
A warning by the northern Catholic bishops, then, that multiple economic pressures are converging to create "life-threatening levels of deprivation", is a timely one.
The bishops said the Chancellor's tax cuts would benefit the richest but bring little comfort to those most at risk and highlighted the priority for an executive above other concerns to address the real needs of families and businesses.
There is now a very real danger that an ideological-driven new administration will crash the UK economy, with devastating consequences for lives on both sides of the Irish Sea.
On the feast day of St Vincent de Paul, who dedicated himself to the welfare of the most vulnerable, the bishops' warning should be heeded before it is too late.