Even now, Sunak and the Tories cannot abandon austerity | William Keegan

WWe are past the Ides of March and Boris Johnson is still in office. Until the start of Putin’s invasion of Ukraine, the conventional wisdom was that the skids were under the prime minister: his nine political lives were nearly exhausted and he was under serious threat from the not-too-subtle maneuvering of his neighbor, Chancellor Sunak.

Then Putin emerged as unlikely deus ex machina and conventional wisdom became that Johnson was safe again. Folklore tells us it’s an evil wind that blows no good on anyone: this truly horrific slaughter in Ukraine has led certain observers to say this is ‘Johnson’s Falklands’.

Anyone who believes this needs help. In 1982, Mrs Thatcher was the most unpopular British Prime Minister on record. She took a huge risk by sending a “task force” to deal with the Argentines who had invaded the Falkland Islands. It’s a long story, but the gamble paid off and Thatcher sailed to her second election victory in 1983.

There is simply no parallel, and even suggestions that Britain cannot say goodbye to a prime minister in wartime do not stand up to historical precedent. No matter how much he squirms, Johnson is haunted by the public’s justifiable outrage at Partygate and much that came before it. The serial lawbreaker is on weak ground when he claims to lecture Putin on international law, and has been shown to lack the judgment we demand of leaders when we compare Ukraine’s struggle to Brexit. If an episode were needed to prove that Johnson, for all his apparent political acumen, is in fact a fool, it would be this absurd claim.

But the absurdity doesn’t stop there. We are being told that a ‘Festival of Brexit’ is imminent; Moreover, if he survives this far, the “miracles” of Brexit will be a key feature of his next general election campaign.

Which brings us back to the chancellor. If the Roman poet Horace had been asked to predict the implications of Sunak’s springtime prophecy, he would no doubt have revived a line from his Ars Poetica: “Birthing montes, nascetur ridiculus mus(“The mountains will go into labor, but all they give birth to is a ridiculous mouse.”) Because the chancellor, who had gained enormous popularity by alleviating the financial consequences of Covid, made it, in that popular phrase , to go from hero to zero within 24 hours. This was partly due to his apparent neglect of the oppressed, partly to his disastrous attempt to present himself as “People’s Chancellor” the next day.

While there is a widespread impression that Johnson dismissed Sunak, I would point out that the Chancellor, possibly unknowingly, stuck the political knife in the Prime Minister.

Let’s be honest: even before this budget, the British economy was in serious trouble. It wasn’t alone: ​​the sharp rise in commodity prices triggered by the Ukraine crisis has turned what economists call the terms of trade – import prices relative to export prices – against us and other countries that depend on, among other things, energy imports. As John Llewellyn of Llewellyn Consulting puts it, it is reminiscent of the oil crisis of the early 1970s: “Rising commodity prices first reduce national income, and this in turn affects domestic production.”

It is now being reported that a seriously insecure Chancellor “deeply hates” the independent Office for Budget Responsibility. That’s because it embarrassed him by doing its job: pointing out, for example, that the UK lost 15% of overseas trade as a result of Brexit; that household income is likely to fall the most since the 1950s; and that 27 million people who benefit from the income tax principle are expected to experience a 4% increase in income while inflation is near double digits – in other words, not much sign of the post-Brexit pay boom promised as a result immigration!

The result is that the collapse in real incomes, and hence purchasing power, is likely to make the government even more unpopular than it already is. To put it bluntly, a recession is looming. But Sunak is essentially planning another era of austerity.

I’ve read evidence that Sunak has become a prisoner of the Treasury Department, which, apart from when Gordon Brown was Chancellor, has always wanted to cut public spending. But Sunak is a willing prisoner. He’s so un-Keynesian that even at times like this he wants to cut public spending.

He may have stepped down as a candidate to immediately replace Johnson. But I suspect his reluctance to use fiscal policy to counteract recessionary forces bodes ill for Johnson’s administration.

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