Expert economist Julian Jessop’s expert answers to your supply crisis questions

·3 min read
Empty shelves at a Sainsbury’s supermarket in London (Getty Images)
Empty shelves at a Sainsbury’s supermarket in London (Getty Images)

The ongoing supply crisis has been causing problems in the UK, which has faced lorry driver, petrol and food shortages in recent months.

But what is really behind it? And just how bad is it?

Economist Julian Jessop, a former chief economist at the Institute of Economic Affairs, tackles your questions:

Causes

Q: If the unique UK supply chain issues aren’t due to Brexit. Not due to the hostile environment towards "foreigners". Not due to the ongoing raging epidemic in the UK. Not due to the obnoxious ineptitude of your current regime.

Then what can it possibly be?

Old Dane

A: With the exception of the recent panic at the pumps (which was uniquely British), the UK is not the outlier that many assume.

Supply problems and labour shortages are global: the US is being hit just as hard as the UK, partly because both the US and UK have seen a relatively strong recovery this year and are therefore running into capacity constraints sooner.

This is not to deny that Brexit is a big issue in some sectors (e.g. shortages of agricultural workers). But they are other non-Brexit UK-specific factors too (e.g. impact of new tax rules for agency drivers).

Q: Since using the ‘B word’ is forbidden by the Tories as by Labour there has to be another reason why our shortages lead to empty shelves here at home and not in the EU.

So I’m trying some things here, could it be that our rules and legislation are simple to hard on professions? Do HGV drivers really need all that training? How often does an HGV driver for example has drive through narrow streets? Butchery is another example. Are we all not able to cut meat at home why have special rules for those in the business?

Brad

A: Sorry but I don’t accept that food shortages and empty shelves are widespread in the UK. Retailers are reporting only patchy disruption, with alternative almost always available.

The recent problems at the pump are an exception, but this was driven by panic buying which turned a minor hiccup into a genuine crisis.

Rest of Europe

Q: Would being a member of the single market have avoided the current supply crisis?

Sturluson

A: Not avoided completely - these are global problems - but perhaps reduced. The end of free movement of labour from the EU after leaving the SM has definitely contributed to the labour shortages in some sectors. Nonetheless, this could still have been handled better with a more flexible post-Brexit visa system (the UK govt is at least now doing something about this).

Q: Let me put it this way (I live in Italy): I have not personally seen, read of in the press, seen on TV, heard from friends or acquaintances of any shortages of any kind in shops and supermarkets. Not now, not during lockdown.

Lhcts

A: I live in the UK and have yet to see any food shortages or empty shelves, but doubtless I’m biased!

Retailers themselves are only reporting patchy disruption, with alternatives almost always available. Worth noting too that UK food price inflation remains relatively low.

Lorry drivers shortages

Q: Surely, restoring the DVLA to a functioning unit is the highest priority and yet a settlement was agreed between unions and management but it was overruled by the minister, Grant Shapps, and then there was silence.

Four thousand new licenses are sitting on a DVLA desk(s) and so 4,000 trained HGV drivers actually in the UK cannot ply their new chosen trade.

I wonder why the government prefers to import foreign drivers rather than expedite new UK trained HGV drivers? This appears to be perverse behaviour.

Mr Bishi

A: You’re right that allowing in more EU drivers can only be short-term fix, especially as there are shortages of drivers in the EU too.

But I personally still think it was right to extend more visas to help deal with a short-term problem. And even more important in sectors like agriculture, where the UK is heavily dependent on EU workers (and this isn’t going to change overnight).

Interest rates

Q: When, and how much by, do you think interest rates will rise? And what might happen as a result? Thanks

Forthaven

A: If I were setting rates I would already have raised them! GDP and employment are now back at or close to pre-Covid levels, and inflation is heading further above target, and yet rates are still at an emergency low of just 0.1 per cent.

I suspect though that the Bank will only move slowly, perhaps to 0.25 per cent by the end of this year and back to the pre-Covid level of 0.75 per cent later in 2022.

These would still be exceptionally low levels and rates would only be going up because both activity and inflation are stronger than expected - context is important.

Read More

Christmas shoppers warned about post-Brexit charges on orders from EU

Travel to Europe: the post-Brexit passport rules

Government delays key Brexit border checks

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting