The IMF is still optimistic.  Someone needs to be

Britain’s latest irritation is a shortage of drivers.  What could it be: foreign truckers repatriating to Bulgaria post-Brexit; a shortage of motorway lavatories?  

The Daily Telegraph thinks it might also have something to do with the backlog of 56,144 licence applications that built up during Covid.

Which persists because staff at the licensing agency don’t want to go to the office.  And management can’t let them handle personal data at home.  An upsurge of strikes certainly isn’t helping either.

Not everyone responded with due gravity.  When the government issued a friendly reminder to existing licence holders, one German-qualified holder let it be known: 

I’m sure pay and conditions for HGV drivers have improved, but ultimately I have decided to carry on in my role at an investment bank”

Welcome to the post-Covid world.  Not just in Britain – supply disruption, rising inflation and interest rates creaking upwards are global phenomena.

The IMF has issued a double adverb warning for central banks to be “very, very vigilant” over inflation risks.

The job of markets is to adjust.  This is how economic growth happens.  

And after a global disruption of supply and demand on the scale of the 1970s oil price shocks, or the exit from controls after the second world war, it looks like there is lots of adjustment to be done.  

Which is perhaps one reason the IMF is a little less optimistic in its latest World Economic Outlook:

“The global economy is projected to grow 5.9 percent in 2021 and 4.9 percent in 2022, 0.1 percentage point lower for 2021 than in the July forecast.”

It says:

“The downward revision for 2021 reflects a downgrade for advanced economies—in part due to supply disruptions—and for low-income developing countries, largely due to worsening pandemic dynamics.”

And:

“The fault lines opened up by COVID-19 are looking more persistent—near-term divergences are expected to leave lasting imprints on medium-term performance.”

No wonder it feels:

“Policy choices have become more difficult, with limited room to maneuver.” 

Which is worth some reflection.

Politicians everywhere might feel that their policy choices have always been more difficult, particularly after the global financial crisis.  But for the last ten years, they have had the benefits of low interest rates, rising house prices and easy debt increases.

Now they are reliant on the workers and businesses in the private sector to deliver the necessary productivity growth, while also absorbing the costs of more regulation (that’s you climate change) and higher taxes.

While keeping the workers (when they are working) at Britain’s licensing agency happy.

The IMF is optimistic. Policy choices may be getting more difficult yet.

Perhaps most difficult in those countries where government policy has so far been most successful in cushioning voters against change.

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