When the PM returns to his desk, he won’t like what’s in his in-tray.
A global crisis seems to be brewing on Andy Burnham’s watch (Image: Getty)
A global crisis has been brewing for years and now it looks ready to explode. This isn’t Andy Burnham’s fault. But if it does blow up, it will define his premiership. The stakes couldn’t be higher, and Burnham isn’t ready for it. So far he’s been focused on cutting bus fares, ending rough sleeping and cultivating his TikTok feed. Now he’s about to face the Four Horsemen of the Apocalypse, according to an alarming report in The Daily Telegraph. And that’s a very different order of challenge.
The Telegraph’s world economy editor Ambrose Evans-Pritchard is warning that “a perfect storm of wars in Iran and Ukraine, extreme weather and the AI bubble threatens disaster”. That’s an awful lot for a bloke from Manchester to contend with. All the wrong things are rising at the same time: oil, debt, spending, bond yields, inflation and interest rates. The cost-of-living crisis is back with a vengeance. Britain risks a financial crisis too.
The world faces an acute energy crisis this winter, as Donald Trump struggles to end the war with Iran and reopen the Strait of Hormuz to oil tankers. Iran-backed Houthi rebels in Yemen are menacing the Bab el-Mandeb Strait, another key oil shipping route. Saudi Arabia’s East-West pipeline has also been shut after attacks. Ukraine is hammering Russian oil refineries, further hitting fuel supplies, while Russia retaliates against Ukrainian energy infrastructure. Supplies are shrinking, prices rising.
Food prices could rocket too. Putin is targeting Ukrainian grain silos and warehouses, while energy shortages have hit fertilisier production and pricier diesel makes using tractors and combine harvesters more expensive. That could feed through into supermarket prices. Putin’s cronies are making ever wilder threats to attack the UK. Trump has lost the plot. Burnham has a lot on his plate.
This year’s powerful El Niño isn’t helping. Summer droughts hit output from hydropower plants and nuclear reactors which rely water cooling, while driving up demand for air-con. European gas storage is at record lows. And Burnham is still dithering over whether to drill ours.
Thirty-year gilt yields are nudging 6%, well above Liz Truss levels, potentially adding billions to Britain’s already sky-high borrowing costs. The US is in an even bigger pickle as its national debt surges past $40trillion. If the AI bubble bursts, global stock markets will crash. Perhaps Evans-Pritchard’s article is overdoing it. He’s an authority but leans to the melodramatic. Maybe winter will be a breeze. But it’s going to be a close run thing.
Labour has left us in a terrible position to withstand what’s coming. Rachel Reeves taxed growth almost to a standstill, while hiking up taxes and borrowing. This parliament, Labour is going to borrow £650billion more than planned, lifting the national debt towards £3.5trillion. Unemployment is rising, especially among the young. Chancellor John Healey’s fiscal headroom is shrinking by the day.
Yet all Andy Burnham wants to do is tax more, borrow more and spend more. His left-wing MPs and trade union paymasters won’t accept anything else. We have the worst possible government at the worst possible time. Burnham and Healey won’t survive the tough measures required if this crisis does strike.
Watch this one like a hawk. Watch the oil price, currently $109 a barrel. Watch 30-year gilt yields, now 5.9%. Watch UK inflation, still low at 2.9% in July but expected to rise. If all three keep climbing, we have a big problem. Then watch Andy Burnham. He’s all we’ve got.