Around two million workers have staged Britain’s first mass strike for more than 30 years today. Teachers, hospital staff and border guards have taken to the streets in an act of defiance towards the government and its harsh austerity measures. Public sector employees are protesting over reforms that unions say will force them to work for longer before they can retire and pay more for pensions which will be worth less.
The strike is in reaction to an economic climate that is growing gloomier as we approach the New Year. The Conservative-led coalition government cut economic growth forecasts this week from 2.5% to 0.7% and announced further reductions in jobs and pay; the austerity programme is now scheduled to carry on until 2017.
Chancellor George Osborne criticized the strikes, ironically claiming they are “only going to make our economy weaker and potentially cost jobs.” Most schools in England and Wales are expected to close as a result, surgery is set to be delayed in hospitals, and long delays are expected at ports and airports.
The strikes show a certain level of conflict between UK citizens and the government; they mimic the reactions to austerity in Eurozone countries such as Portugal, Spain and Greece. Due to the relative isolation of the incident, investors will not view today’s political rebellion in the UK with the same level of caution as they did when strikes took place in Europe. Exchange rates reflect this as they remain static today with the GBP/EUR resting at 1.171.
Olli Rehn, Economic and Monetary Affairs Commissioner at the European Union, has described the next 10 days as crucial for the 17-nation bloc, stating “We are now entering the critical period of 10 days to complete and conclude the crisis response of the EU.” Italian and Spanish bonds are once more approaching the heady heights of impossible sustainability, German bunds failed to sell out last week, and France’s AAA credit rating is at risk. The problems in the UK appear overshadowed by the grand scale financial crisis on the continent… That is until you consider the implicit ramifications of a Eurozone collapse. EU trade is vital for the UK, and fierce debt contagion would be uncontrollable in the event of disaster; whilst the Pound does benefit from Britain’s sovereignty, it is absolutely vital that an effective debt-reduction programme is implemented for the future of both economies.
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