I hate to be gloomy but, if you hadn’t already noticed, our economy is in serious trouble. Like all nations, our inactivity during the pandemic had a devastating effect on everything that’s made or produced. During the crisis, government spending was beyond generous, and the sums borrowed to allow us to stay home and save lives will burden generations to come.
As the slow return to normal began, everything we usually buy was in short supply, including electronic goods, cars, vans, building materials and semi-conductors, which (I’m told) are essential to life itself.
Just as we could see some light at the end of the wretched Covid tunnel, that Russian lunatic decided to invade Ukraine. Since his merciless attacks commenced, like everyone else Islanders have been feeling economic pain.
Those pesky garage queues are back. People are buying more fuel than usual, causing the pumps to run dry. In turn those of us with brains get anxious too, so we fill up ‘just to be sure’. I’m not cross about it because I know there’s actually plenty of petrol and diesel to go around; panic buying is almost understandable when we all need fuel to get where we need to be. Last week petrol was £1.80 a litre; when I saw the pump price, it crossed my mind for a nano-second to walk or cycle instead.
Last year the IMF (remember them?) predicted fuel would settle at $56 a barrel; it was $139 last Monday. The pump price is at a 30-year high, and that will hurt because anything we do and everything we buy is impacted. Whatever we need on the Island has to come by road on lorries, then on ferries, and – like hauliers – ferry operators are never shy when it comes to introducing fuel surcharges.
When Gordon Brown was in power and oil hit $100 dollars a barrel, I recall three ferry fare hikes in a single year. Strangely, I don’t recall them coming down again. The cost of gas, electricity and heating oil is eye-watering too. Building material prices have risen fast, and some products, like timber, have almost doubled in price since 2019. Steel has seen a 70 per cent increase, partly because it needs a lot of energy to produce; that’s why we all but gave up making it in Britain.
According to Farmers Weekly, the price of grain is 42 per cent above the 5-year average. I know a farmer who used to budget £25,000 for fertiliser; this year the same amount cost him £42,000 – same farm, same fields. He’s trying to agree a price now for next winter’s crop, and they’re quoting £100,000 – four times what he paid just three years ago. What will the price of wheat need to be next year to justify that investment? All food prices are up, but farming is a risky and weather-dependent business. Would you give growing a go at that price? I wouldn’t.
Suddenly DEFRA’s woke policy of rewilding land while phasing out farm payments and encouraging tree planting looks seriously flawed. They need to urgently do something to encourage British farmers to grow food.
So far, the one thing seemingly unaffected is house prices, but for how long? If you’re about to exchange contracts, please stop reading now. The days of ultra-low interest rates are long gone, and at exactly the time all of us will have much less disposable income. Mark my words, by the end of 2022, we’ll be in recession and house prices will fall sharply.