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Sensemaker: Mo’ money

Sensemaker: Mo’ money

What just happened

Long stories short

  • US officials warned that Russia is “moving towards an imminent invasion” of Ukraine and is not withdrawing troops as it claimed, but Joe Biden stressed that a diplomatic solution remained possible.
  • Emmanuel Macron said France and its allies will withdraw their troops from Mali after almost a decade of fighting Islamist militants in the West African country because of a breakdown in relations with the ruling military junta.
  • Councillors in York said they want to revoke Prince Andrew, the Duke of York’s honorary freedom of the city after he settled a civil sex abuse case against Virginia Giuffre.

Mo’ money

When Boris Johnson promised to create a “high-wage economy” at the last Conservative conference in October, wage growth was already up 4.3 per cent on the same month of the previous year. The latest statistics, which cover December, show wages grew by 4.2 per cent. Early estimates for January suggest wages grew by a staggering 6.3 per cent.

The prime minister’s statement now appears to have been less a promise and more a reasonable economic forecast: 

  • Labour shortages have been apparent for months. While companies knew free movement of labour between the UK and EU would end with Brexit, the pandemic dominated their capacity to prepare for the change. Only 8 per cent of firms said they understood and were prepared for the new immigration rules just two months before they were published in October. The CBI, the country’s largest business lobby group, has called on the government to relax immigration rules for EU nationals to ease the supply of labour.
  • Covid hammered labour-intensive sectors like hospitality and retail. Former employees have checked out – many permanently. New official numbers show there are about a million fewer workers than before the pandemic – 400,000 of them are classed as “economically inactive” for reasons that may include Long Covid or workers holding out for better wages.
  • Inflation has also been running high since October. That month, the consumer price index grew by 3.8 per cent on the same month of the previous year. The main inflationary pressures exist beyond the UK’s control as the price of energy imports spikes. More pressure comes from a rebound in consumer demand in the US, which is pushing up the price of goods. 

Wage inflation was mostly predictable but policymakers were not prepared for it. The Bank of England’s governor, Andrew Bailey, whose mandate is to keep inflation at 2 per cent, said on the back of the latest wage growth statistics that he wanted to see “quite clear moderation” in the wage-bargaining process between workers and employers, which he sees as an upward pressure on prices. 

But: employers rather than workers can also absorb some of the inflationary pressure. And: inflation is running faster than wage growth. Real wages – nominal wage growth less inflation – are actually down by 0.8 per cent according to the latest data. 

Workers, in spite of the wage inflation concerns, are worse off. There’s also considerable variation in wage growth by sector. Pay is rising fast in IT and computing, nursing and medical care, but not in retail, for example. And while workers’ wages vary by sector, the prices they pay for goods don’t.


You can listen to the final episode of the Tortoise produced series for BBC Radio 4 on the tank debt that has stood in the way of Nazanin Zaghari-Ratcliffe’s release at 1.45pm. In Episode 5, Ceri Thomas investigates how negotiations between the UK and Iran to settle an old debt and allow Nazanin to return to her family in the UK take a new turn.

You can also join us next Tuesday at 6.30pm GMT for a ThinkIn with Richard Ratcliffe and Sherry Izadi as we explore how a 1970s arms deal is impacting families today.

Wealth investment, fairness, prosperity

Trump fraud case
A New York judge ordered Donald Trump and his children Donald Jr and Ivanka to appear for a deposition in the civil case brought by the state’s attorney general Letitia James against the Trump Organization. James is investigating whether the family company used “fraudulent or misleading” valuations of its assets to acquire loans and reduce its tax burden. The Trumps tried resisting compliance with James’s subpoena for them to appear and present documents until Judge Arthur Engoron ruled that it would have been “a blatant dereliction of duty” for her not to subpoena them. They must appear within 21 days and present their documents within 14 days.

belonging identity, society, beliefs, countries

LGBTQ poll
One in five Gen Z adults in the US identify as LGBTQ, a Gallup poll found. The generational shift means LGBTQ people could make up between 10 and 15 per cent of the country’s population in the near future, as more Gen Zers enter adulthood. The percentage of adults who identify as LGBTQ has already doubled over the past decade. Jeff Jones, the author of the poll, said that “the kids” are now growing in an environment where they are much more likely to acknowledge and accept their sexual identity than people in the past.

New things technology, science, engineering

Musk antics
Tesla and Space X’s CEO Elon Musk has long been in hot water for his now-signature method of sharing information and asking for advice about his companies via Twitter. The Securities and Exchange Commission (SEC) has been on Musk’s case since he tweeted in 2018 about Tesla going private, which they claim misled investors. Tesla agreed to increased monitoring of his posts to his 70 million followers, but the settlement doesn’t seem to have stuck. In November, when he was subpoenaed by the SEC to show how his posts were being monitored, Musk ran a Twitter poll asking if he should sell 10 per cent of his Tesla shares. Now, in a letter from his attorney to the judge who oversaw the 2018 settlement, the billionaire has called out the SEC for “targeting” his companies because he has been outspoken and for trying to “chill” his First Amendment rights. Musk has also been called out for a now deleted tweet yesterday comparing Canadian president Justin Trudeau to Hitler in response to bans on crypto-currency payments to protesting truckers in Ottawa. “Chilled” indeed.

The 100-year life health, education, living, public poliCY

Covid mental health 
At our Open News Meeting on Wednesday, we flagged the potential mental health fall out from the pandemic – and it seems we aren’t the only ones concerned. The British Medical Journal published a study this week comparing 153,000 patients in the American veterans health administration system who got Covid with people who did not contract the virus. In the months after contracting Covid, the researchers found there was a 39 per cent higher chance of a depression diagnosis and 35 per cent more for anxiety. Brain fog, sleep issues and stress disorders were also more likely. A particular worry for Ziyad Al-Aly, who worked on the study, is the increase they saw in alcohol and opioid use in the group “especially considering the high rates of opioid use disorders pre-pandemic”. 

Our planet environment, natural resources, geopolitics

Storm Eunice
Eunice, one of the worst storms in decades, hit the UK overnight. The Met Office advised millions of people to stay home, as gusts are predicted to rise above 100mph across much of southern and eastern England, and south Wales. Hundreds of schools are closed, trains are being cancelled, and power networks have failed. The Met Office’s red warning –  significant danger to life – is in place from 7am until noon today and the amber warning – increased likelihood of disruptive weather – applies from 5am to 9pm.

Thanks for reading. Please share this around and tell us what we’ve missed. News tips and story ideas are welcome. Email them to sensemaker@tortoisemedia.com.

Paul Caruana Galizia

With additional reporting by Phoebe Davis.

Photographs Getty Images

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