“Far too many people have avoided getting the care that they need simply because it was too expensive, and that’s why this plan is essential,” Mark Holland, the federal health minister, said at a press conference on Dec. 11, 2023. He also noted that the plan is “going to help make life better for eligible Canadian residents because they won’t have to make the choice between paying their bills and getting the care that they absolutely need.”
The plan will cost $13 billion over the next five years, and $4.4 billion annually in subsequent years.
When can you apply for the federal dental plan for seniors?
The government has announced that application dates for the CDCP will be rolled out gradually. According to its website, it will mail letters to potentially eligible seniors aged 87 and older in mid-December; ages 77 to 86 in January 2024; ages 72 to 76 in February 2024; and ages 70 to 71 in March 2024. The letters will contain a personalized application code and instructions to call Service Canada and apply by phone.
Letters will only go out to those who had an adjusted family net income of less than $90,000 in 2022, based on their tax return for that year, and they will be mailed to the address used in that tax return. (Haven’t filed your 2022 taxes? It’s a good time to catch up!) There’s no information yet on what to do if you think you qualify for the CDCP but don’t receive a letter, but you could try calling a CDCP representative at 1-833-537-4342. And if your address has changed, contact the Canada Revenue Agency to ensure its records are up to date.
Starting in May 2024, potentially eligible Canadians aged 65 to 69, and those aged 70 and up who received a letter but could not apply by phone, can apply for the CDCP online. Those who are approved for the CDCP will be enrolled in the program by Sun Life, the service provider that has been contracted to manage the dental plan.
When can other eligible Canadians apply for the federal dental care plan?
For children under age 12, applications for the Canada Dental Benefit are open until June 30, 2024—here’s how to apply.
The government will start accepting CDCP applications for children under 18 and adults who have a valid disability tax credit certificate starting in June 2024. All other eligible Canadians can apply in 2025.
Who qualifies for the Canadian Dental Care Plan?
To qualify for the CDCP, the government says that you must:
Click the link above to download the spreadsheet tool.
Open the file. Enter your personal and household expenses in the columns titled “Planned” and “Actual.” You can use the “Insert” function to add new rows or the “Delete” function to remove them as needed. The “Budget balance” table will calculate the total automatically, even if you delete rows or cells. Note: Avoid deleting the “Subtotal” row in each table, as this will affect the budget balance calculation.
If you customize the spreadsheet, be mindful of the formula in the “Budget balance” section. Remember to update it if you add another category to the budget, for instance.
First, there was the trend of “quiet quitting”: a disgruntled employee doing the bare minimum required for their role. Then there was “quiet firing”: an employer reducing a worker’s duties and training, subtly nudging them to quit. And then, in 2023, we saw the rise of “quiet hiring”: an employer looking to its existing employees to fill a skills gap or take on more responsibilities, rather than hiring someone new. Quiet hiring is typically a cost-cutting or cost-saving measure, but it can also be an opportunity for a staffer who wants to try something new, move up to a new role or stack their case to ask for a raise. Quiet hiring can also refer to outsourcing work to short-term contractors instead of hiring new workers. —Jaclyn Law
2. Soft saving
Facing high inflation, high interest rates, expensive housing and mounting debt, many young people are unsure if they’ll ever be able to retire. So, many Gen Zers are rejecting aggressive saving (see: the FIRE movement) and embracing “soft living”—prioritizing things like comfort, balance, personal growth and wellness. “Soft saving” is part of that. It’s a lower-stress approach to personal finance and investing that focuses on the present. That doesn’t mean Gen Z is spending recklessly—but some might see saving for retirement as more of a nice-to-have than a need. —J.L.
Recommended savings reads
3. Inflation isolation
Is inflation dampening your social life? A November 2023 Ipsos poll found that the rising cost of living is causing “inflation isolation.” Half of Canadians are staying at home more often, and a third of us are socializing less to avoid spending money. As a result, 20% of us are feeling isolated. Pretty bleak, right? Plus, those of us who are struggling with debt are more likely to feel stress and anxiety, as well as cut back on seeing friends and family. If you’re experiencing feelings of anxiety, stress or depression, read our guide to finding free and low-cost mental health resources in Canada. —Margaret Montgomery
Recommended inflation reads
4. Housing-market nepo baby
When I first saw this term in a recent Wealthsimple newsletter, I couldn’t help but laugh… and then I wanted to cry. “Nepo baby” refers to the child of a celebrity who has benefited from their parent’s success, wealth and name recognition. A nepo home buyer in Canada is someone whose parents already own a home and can help their kids afford a down payment for a home, according to some sources. Statistics Canada reports that “in 2021, the adult children (millennial and Generation Z tax filers born in the 1990s) of homeowners were twice as likely to own a home as those of non-homeowners.” Adult children whose parents owned multiple properties were three times as likely to own a home than those whose parents were non-home owners. —M.M.
Recommended real estate and mortgage reads
5. Recession core
Move over, minimalism—recession core is here. Yep, that’s right, there’s a whole aesthetic inspired by living in a recession. Basically, this means going back to simpler styles and using items already in your wardrobe. Look, I get it. Minimalism might actually require you to spend lots of money on “clean” and refined-looking items, so that’s out of the question for many right now. Instead, many of us are looking for greater value when we shop—a habit that could pay off even after the economy improves. —M.M.
Recommended thrifty reads
We can think of several more financial buzzwords that were popular this year, from “tip-flation” to “funflation.” Will they still be talked about in 2024, or will they go the way of “YOLO,” “the new normal” and “The Great Resignation”? Only time will tell. We want to know which trendy money words you love and hate. Share your picks in the comments below, and then boost your financial vocabulary by checking out the MoneySense Glossary.
Margaret Montgomery is MoneySense’s editorial assistant and MoneyFlex columnist. She studied business administration at Wilfrid Laurier University and journalism at Centennial College.
Jaclyn Law is MoneySense’s managing editor. She has worked in Canadian media for over 20 years, including editor roles at Chatelaine and Abilities and freelancing for The Globe and Mail, Report on Business, Profit, Reader’s Digest and more. She completed the Canadian Securities Course in 2022.
Home buyers still active. (Photo by Tim Boyle/Getty Images)
Getty Images
Housing has become increasingly expensive. According to the National Association of Realtors,mortgage rates on average have risen by more than a full percentage point over the last 12 months. The average price of a home has inched up as well. Taken together and measured against household incomes, the statisticians at the Association estimate that affordability of home ownership for the average American has plummeted nearly 10% over the past year and today sits at its lowest level since 2011. Economics 101 would tell us that demand should slack off. Yet, home sales continue to rise. The Census Bureau reports that sales of privately owned houses fell off a bit in October, the most recent period for which data are available, but remain some 18% above year-ago levels. Sales have held up in defiance of standard price theory because Americans are still very concerned about inflation.
Indeed, the behavior of the housing market, more than any other economic gauge, announces that Americans, though aware of easing rates of inflation recently, are concerned that the economy is far from out of the woods on this matter. They fear a rising cost of living and exhibit that fear by flocking to the best inflation hedge available to them — home ownership — and secure it even if it means stretching their household budget to the limit. Few homeowners can quote the numbers, but the history of the last great inflation guides their decisions. From the mid-1970s to the mid-1980s, the crushing burden of 6.2% inflation a year tracked by the Bureau of Labor Statistics was still bested by an 8.7% rise in residential real estate values recorded by the Census Bureau. The 2.5 percentage point difference more than made up for the burden of paying mortgage rates that rose to double digits during that time.
For others, the logic of ownership is compelling in yet a different way, even if it means paying high mortgage rates and stretching the household budget to do so. Once the house is secure, whether financed with a cash purchase or a fixed rate mortgage even a high-rate one, the family has fixed the price of a major budget item – shelter – a great comfort when people fear that all other prices will rise unpredictably. For those who remain wary of inflation – and that is most people outside the White House – the peace of mind purchased this way is well worth the budget strains. Affordability might prevent a purchase as large or in as desirable location as hoped, but these benefits justify sliding down the pricing distribution. And this kind of buying has held up demand, despite rising costs.
Pricing might have given way despite this support for demand were it not that supply has also declined. It seems that existing owners, especially those who purchased at the very low mortgage rates that prevailed until last year, have no desire to walk away from such advantages. If for some reason, they need to change residences, they cling to the original mortgage and the house to which it is attached and rent the property, encouraged further by the 11% rise in national rents recorded between 2021 and 2022. They then rent in their new location until conditions for a new purchase are more favorable. Then they sell the old house to buy a new one. At the same time, homebuilders, the Census Bureau reports, have cut back on the construction of single-family houses, some 4.4% over the last year, and some, noting the earlier rise in rents, have turned to the construction of rental properties. Together, this shift by builders and the relative slowdown in the supply of owner-occupied dwellings available for sale has held up prices in this area of the market while causing a sudden halt this year in what was a powerful uptrend in rents.
As is so often the case, the matter is more complex than simple supply-demand-price considerations, especially in a product like housing that lasts for a lot longer than a haircut. If and when inflation fears fade and the Federal Reserve begins to lower interest rates, matters will seem equally perplexing as this confluence of motivations works in reverse.
THE HAGUE — One line in Geert Wilders’ inflammatory pitch to Dutch voters will haunt Brussels more than any other: a referendum on leaving the EU.
Seven years after the British voted for Brexit, a so-called Nexit ballot was a core plank of the far-right leader’s ultimately successful offer in the Netherlands.
And while Wilders softened his anti-Islam rhetoric in recent weeks, there are no signs he wants to water down his Euroskepticism after his shock election victory.
Even if Dutch voters are not persuaded to follow the Brits out of the EU — polling suggests it’s unlikely — there’s every indication that a Wilders-led government in The Hague will still be a nightmare for Brussels.
A seat for Wilders around the EU summit table would transform the dynamic, alongside other far-right and nationalist leaders already in post. Suddenly, policies ranging from climate action, to EU reform and weapons for Ukraine will be up for debate, and even reversal.
Since the exit polls were announced, potential center-right partners have not ruled out forming a coalition with Wilders, who emerged as the clear winner. That’s despite the fact that for the past 10 years, he’s been kept out by centrists.
For his part, the 60-year-old veteran appears to be dead serious about taking power himself this time.
Ever since Mark Rutte’s replacement as VVD leader, Dilan Yeşilgöz, indicated early in the campaign that she could potentially enter coalition talks with Wilders, the far-right leader has worked hard to look more reasonable. He diluted some of his most strident positions, particularly on Islam — such as banning mosques — saying there are bigger priorities to fix.
On Wednesday night, with the results coming in, Wilders was more explicit: “I understand very well that parties do not want to be in a government with a party that wants unconstitutional measures,” he said. “We are not going to talk about mosques, Qurans and Islamic schools.”
Even if Wilders is willing to drop his demand for an EU referendum in exchange for power, his victory will still send a shudder through the EU institutions.
And if centrist parties club together to keep Wilders out — again — there may be a price to pay with angry Dutch voters later on.
Brexit cheerleader Nigel Farage showed in the U.K. that you don’t need to be in power to be powerfully influential.
Winds of change
Migration was a dominant issue in the Dutch election. For EU politicians, it remains a pressing concern. As migrant numbers continue to rise, so too has support for far-right parties in many countries in Europe. In Italy last year, Giorgia Meloni won power for her Brothers of Italy. In France, Marine Le Pen’s National Rally remains a potent force, in second place in the polls. In Germany, the Alternative for Germany has also surged to second place in recent months.
In his victory speech, Wilders vowed to tackle what he called the “asylum tsunami” hitting the Netherlands.
“The main reasons voters have supported Wilders in these elections is his anti-immigration agenda, followed by his stances on the cost of living crisis and his health care position,” said Sarah de Lange, politics professor at the University of Amsterdam. Mainstream parties “legitimized Wilders” by making immigration a key issue, she said. “Voters might have thought that if that is the issue at stake, why not vote for the original rather than the copy?”
For the left, the bright spot in the Netherlands was a strong showing for a well-organized alliance between Labor and the Greens. Frans Timmermans, the former European Commission vice president, galvanized support behind him. But even that joint ticket could not get close to beating Wilders’ tally.
Next June, the 27 countries of the EU hold an election for the European Parliament.
On the same day voters choose their MEPs, Belgium is holding a general election. Far-right Flemish independence leader Tom Van Grieken, who is also eyeing up a major breakthrough, offered his congratulations to Wilders: “Parties like ours are on their way in the whole of Europe,” he said.
Hungary’s Prime Minister Viktor Orbán was celebrating, too: “The winds of change are here!”
Pieter Haeck reported from Amsterdam and Tim Ross reported from London.
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Tim Ross, Pieter Haeck, Eline Schaart and Jakob Hanke Vela
Life is expensive, and in these states, it’s even worse.
With the ongoing surge of the cost of living, the minimum income required for an individual to sustain themselves has risen across the entire nation. The July 2023 Consumer Price Index reported a 3.2% escalation in prices within the last 12 months on the “all items index.”
But if you’re looking to move or relocate for a job, there are some states you might need to avoid—or ask for more money—depending on your income.
Personal finance platform GOBankingRates recently conducted a survey on the living costs for a single person in all 50 states to find the average annual wage one needs to sustain themselves in 2023 and found that Hawaii is the No. 1 state with the highest minimum living wage for singles to get by.
To calculate the yearly expenses for essentials, the researchers used data from the 2021 Consumer Expenditure Survey from the Bureau of Labor Statistics, focusing on costs for a single person. After obtaining the essential cost data, researchers then doubled it to calculate a living wage, accounting for discretionary expenditures and savings.
In Hawaii, a single individual needs a six-figure income of $112,411to meet basic needs. The state with the second highest is Massachusetts at $87,909, followed by California at $80,013, and New York at $73,226.
Given that housing constitutes a large portion comprising a living wage, it’s no accident that the states requiring the highest average income for an individual have all seen competitive and skyrocketing housing prices. According to a separate report by RentCafe released in August, the four states with the highest living wage requirements are also among the ranks for the most expensive average rent in the country.
Here are the 10 states in the U.S. with the highest minimum living wages for an individual in 2023, according to the report, as well as the average rent, per RentCafe.
A six-figure salary may seem like a lot, but depending on where you live, your take-home pay might only be a quarter of your earnings after accounting for taxes and the cost of living.
A new report by financial technology company SmartAsset found that the purchasing power of a $250,000 salary drastically varied based on location.
The city where a $250,000 salary was worth the least was New York—those six digits dwindled down to a mere $82,421 after factoring in taxes and the cost of living—followed by Honolulu ($82,672) and San Francisco ($82,776).
The cities where high-earners take home the most of their $250,000 salaries are Memphis, TN which came in at No. 1 with $203,664, followed by El Paso, TX ($200,180), and Oklahoma City, OK ($197,381).
SmartAsset used its paycheck calculator to determine the take-home pay of 76 of America’s largest cities and then adjusted the take-home amount to factor in the average cost of living for each of the locations. The three cities (New York, Honolulu, and San Francisco) where high-earners lose most of their salary to taxes and other expenses were also the only cities in the report where workers’ six-figure salary was reduced to five digits after taxes and costs.
Here are the U.S. cities where the value of a $250,000 salary is worth the most and least.
Where $250,000 goes the furthest:
1. Memphis, TN: $203,664
2. El Paso, TX: $200,180
3. Oklahoma City, OK: $197,381
4. Corpus Christi, TX: $196,594
5. Lubbock, TX: $196,374
Where $250,000 is worth the least:
1. New York, NY: $82,421
2. Honolulu, HI: $82,672
3. San Francisco, CA: $82,776
4. Long Beach, CA and Los Angeles, CA (tie): $101,635
It’s now easy to forget that Turkish President Recep Tayyip Erdoğan was once hailed as the paragon of a “Muslim democrat,” who could serve as a model to the entire Islamic world.
In the early 2000s, hopes ran high about the charismatic, lanky, former football striker, who received only one red card in his playing career, unsurprisingly for giving an earful to a referee. The man from the working-class Istanbul neighborhood of Kasımpaşa promised something new: Finally, there was a master-juggler, who could balance Islamism, parliamentary democracy, progressive welfare, NATO membership and EU-oriented reforms.
That optimism feels a world away now, as Turkey heads into crunch elections on May 14 marked by debate over the centralization of powers under an increasingly authoritarian and divisive leader — dubbed the reis, or captain. Prominent opponents are in jail, the media and judiciary are largely under Erdoğan’s thrall and the kid from Kasımpaşa now rules 85 million people from a monumental 1,150-room presidential complex he built, commonly referred to as the Saray, meaning palace.
Little wonder, then, that the opposition is focusing its campaign on undoing the “one-man regime.” The six-party opposition bloc is vowing to take a pick-ax to the all-powerful presidential system Erdoğan introduced in 2017 and to shift to a new type of pluralist parliamentary democracy. (POLITICO’s Poll of Polls puts the contest on a knife edge, meaning there will probably be a second round in the presidential vote on May 28.)
Kemal Kılıçdaroğlu, the opposition leader challenging Erdoğan for the top job, describes the restoration of Turkish democracy as the “first pillar” of the election race. “In a manner that contradicts its own history … our veteran parliament’s legislative power has been consigned to the grip of the one-man regime,” Kılıçdaroğlu, an avuncular, soft-spoken former bureaucrat, said in a speech on April 23 commemorating the founding of parliament.
Know your onions
But is this talk of democratic restoration seizing the imagination in an election that is, quite literally, about the price of onions and cucumbers?
Turkey’s brutal cost of living crisis is the No. 1 electoral battleground. Kılıçdaroğlu hit a nerve when, onion in hand, he delivered a warning from his modest kitchen — no Saray for Mr. Kemal — that the cost of a kilo of onions would spike to 100 lira (€4.67) from 30 lira now, if the president stays in power.
Stung, Erdoğan insisted his government had solved Turkey’s food affordability problems, saying: “In this country, there is no onion problem, no potato problem, no cucumber problem.” But most Turks know Kılıçdaroğlu’s arithmetic is not outlandish; he is an accountant by training, after all. Annual inflation hit a record high of 85.5 percent last October, and ran at just over 50 percent in March. The Turkish lira has plunged to 19.4 to the dollar from about 6 to the dollar in early 2020.
In contrast to those bread-and-butter campaign issues, the main thrust of the opposition’s manifesto for switching power away from the presidency sounds legalistic. There are provisions to end the president’s effective veto power, ensure a non-partisan presidency and impose a one-term limit. Parliament will be strengthened by measures ranging from a lower threshold for a party to enter the assembly to greater use of independent experts in committees.
Important reforms, certainly, but will they strike a chord with voters? They could well do. İlke Toygür, professor at the Universidad Carlos III de Madrid, observed that while constitutional reforms might not be the “daily conversation,” the big themes of one-man rule and Turkey’s historical attachment to parliament did resonate.
One-man rule, for example, is widely linked to mismanagement of the economy and skyrocketing prices, she noted. Erdoğan has been lambasted for pouring fuel onto the inflationary fire by advocating for slashing interest rates — a stance euphemistically described as “unorthodox.”
“If you link everything to each other and link the one-man rule to the cost of living crisis, to the democracy crisis, and to all the problems in foreign policy, then you are defining this system and you are providing an alternative,” she said.
Toygür also stressed parliament played a crucial role in creating Mustafa Kemal Atatürk’s independent Turkish republic a century ago, and that still counted. “Parliament has a very strong symbolic value in Turkey,” she said, adding that voters appreciated teams in decision-making, something that Kılıçdaroğlu is playing up. “One of the biggest complaints now is that people lost their links to decision-making candidates.”
In stark contrast to the image of Erdoğan as the lone almighty reis, Kılıçdaroğlu portrays himself as building consensus, ready to draw on a broad pool of talent. In videos, he shows himself discussing earthquake-resistant construction, education and nutrition with high-profile mayors, Mansur Yavaș from Ankara and Ekrem İmamoğlu from Istanbul, his vice-presidents in the wings.
What’s more, Kılıçdaroğlu has pushed this vision of himself as an inclusive leader to a dramatic new level by publicly declaring himself to be an Alevi, a member of Turkey’s main religious minority that long suffered discrimination. His Twitter declaration on his identity, in which he called on young Turks to uproot the country’s “divisive system,” went viral. It’s a risky gambit against a populist president from the Sunni mainstream, but the message is clear: Kılıçdaroğlu is styling himself as the pluralist antidote to Erdoğan’s polarizing politics. The humble 74-year-old may be a bit dull after the caustic current leader, but the opposition’s gamble is that’s what Turkey needs.
Power to the president
Most observers looking back to identify a turning point where Erdoğan decided to centralize power around himself select the Gezi Park protests of 2013, when an unusually socially diverse band of demonstrators sought to stop a green space in Istanbul from being bulldozed for a shopping mall.
The protests — eventually smashed with tear gas and water cannon — swelled into a nationwide roar against Erdoğan’s cronyism and strongman style. Demir Murat Seyrek, adjunct professor at the Brussels School of Governance, said it was the first time Erdoğan felt “the threat was against him” rather than the ruling AK party.
Turkish President and People’s Alliance’s presidential candidate Recep Tayyip Erdoğan | Adem Atlan/AFP via Getty Images
The final straw was an attempted coup in 2016 — the facts of which remain opaque — that pushed Erdoğan to hold a referendum in April 2017 on shifting to a presidential system. He won by the narrowest of margins (51.4 percent) and the opposition still disputes the result, not least because the vote was held during a post-coup state of emergency.
Seyrek noted the irony that the presidential system also had downsides for Erdoğan, particularly as he requires 50 percent of votes (+1) to stay in office. Now deserted by bigwigs from his AK party’s early days — former President Abdullah Gül and former Prime Minister Ahmet Davutoğlu have turned against him — he has to find increasingly extreme partners for his coalition to make up the numbers. “Each time, he wins by losing political power to other parties. He is winning by sharing power with more and more people,” he remarked.
A hardened political brawler, Erdoğan is punching back hard against the accusations that he’s the man undermining Turkish democracy.
As he has done for years, Erdoğan is turning the tables and casts himself as the voice of the majority, underlining Islamic propriety and family values, while saying his adversaries are in hock to terrorists, the imperialist West, murky international high-finance and LGBTQ+ organizations. Mainstream rival parties are dismissed as fascists and perverts, and he predicts his voters will “burst” the ballot boxes with their tide of support on May 14.
In an episode typical of Erdoğan’s combative instincts, he scented blood when Kılıçdaroğlu was photographed stepping on a prayer rug in his shoes at the end of March. Although his rival apologized for this unwitting accident, the president whipped up a crowd to boo him, accusing Kılıçdaroğlu of taking his instructions from Fethullah Gülen, the U.S.-based preacher and former AK party ally, whom Erdoğan now accuses of inciting the failed coup in 2016.
Clutching a prayer rug himself, Erdoğan intoned through his microphone: “This prayer rug is not for standing on with shoes. God willing, we’ll be able to perform the prayer of thanks on this prayer rug on May 15.”
Opposition politicians know full well they can easily be typecast by Erdoğan as reactionary voices of an old elite. That’s why they are being careful not to describe their proposed constitutional overhaul of the presidency as turning back the clock to some fictional glory days, but rather as creating something new: What the opposition manifesto calls “a truly pluralistic democracy” that “has never been possible” before.
Free but not fair?
Given the fears about Erdoğan’s lurch toward authoritarianism, speculation is intense over how fair the elections will be, and whether Erdoğan can rig them. Indeed, Interior Minister Süleyman Soylu only fanned the concerns that the government could crack down on the democratic process by describing May 14 as an attempted “political coup” by the West — hardly words to be taken lightly given Turkey’s history of putsches.
With the full resources of the state and pliant media at his disposal, the president can certainly command disproportionate influence. In only the past few days, for example, Erdoğan has been able to offer free Black Sea gas as a pre-election perk.
But Seyrek at the Brussels School of Governance stressed that voting itself in Turkey should never be compared with Russia or Belarus. He argued the vote in each polling station would be closely monitored by all the political parties and other civilian observers. “I still feel in Turkey, what you can do against the result of elections is quite limited,” he said.
The consensus is that Erdoğan will be unable to fix the result in the case of a significant defeat. The greater danger, as noted by several analysts, is that he could attempt some high-risk stratagem in case of a tight result, demanding a recount or calling a state of emergency in case of some diversionary “incident.” That would, however, only inflame the country’s febrile politics just as Ankara needs stability to attract foreign investors and resuscitate the economy.
The more surreal idea — but not an implausible one now — is that Erdoğan could tactically see the time is ripe to lead the opposition and attack Kılıçdaroğlu’s new government. The new president would be highly vulnerable to Erdoğan’s vitriolic rhetoric as he tries to hold together a fissiparous coalition in the teeth of an economic crisis. Paradoxically, though, Seyrek noted that the AK party members in opposition could even support reforms to shake up the presidency and ensure media freedoms, as that would be in their interest. That could prove important as constitutional change would need a hefty parliamentary majority.
Or would Erdoğan simply take umbrage in defeat and quit the country?
Seyrek found that inconceivable.
“In his mind, he is a second Atatürk, he would rather die than escape.”
In the run-up to Sunday’s too-close-to-call election, he has ramped up his poisonous invective against homosexuality, as he seeks to shore up his conservative Islamist base. Almost every other speech from the campaign trail accuses the opposition of undermining family values and of being in the thrall of improbably powerful LGBTQ+ networks — sometimes with hints they are run by paymasters abroad.
“The AK Party has never been an LGBT supporter,” Erdoğan roared at a recent Istanbul rally, referring to his governing party. “We believe in the sanctity of the family. Family is sacred.”
Adding a menacing note, he followed up with: “So are we ready to bury these LGBT supporters in the ballot box?”
To some extent, the homophobic focus of the campaign is easily explicable. Increasingly deserted by his early supporters, Erdoğan is having to form coalition partnerships with more extreme Islamists in this year’s elections.
But even so, his language smacks of a fixation, and an attempt to divert attention from the country’s most pressing ailments — including a snowballing cost of living crisis and scorching inflation.
Diversionary tactics
Fulden Ergen, editor of Velvele.Net, an online debate platform for LGBTQ+ rights, said she was taken aback by the ubiquity of Erdoğan’s propaganda against the LGBTQ+ community in this year’s campaign.
She reckoned the attacks were an attempt to mask how few answers to Turkey’s profound problems the AK Party now has.
“I was not expecting them to be this devoid of policies and just talking about LGBTI,” she said. “The alliance does not have much to give people anymore,” she added, referring to the conservative coalition backing the president. “They don’t know how to deal with the economic crisis. They have no policies left, I see this campaign as a defeat.”
Though he may be running out of ideas, Erdoğan could still win. And that is now a serious concern to LGBTQ+ people.
Life is already tough, and could get significantly worse. LGBTQ+ flags are banned, gatherings are arbitrarily blocked by the government and participants in pride parades are regularly attacked or detained by police. The fear is that their organizations could now be made illegal, and — in the worst case scenario — that laws to protect families could be extended to outlaw homosexuality itself.
Activists say that if Erdoğan stays in power, violence could follow his hate speech.
An anti-LGBTQ+ rally in Istanbul in 2022 | Chris McGrath/Getty Images
One of the dangers is that his government could use security laws to crack down on homosexual relations — casting them as part of a foreign conspiracy. The government is playing on perceptions that “people don’t believe LGBTI can be from Turkey,” Ergen said.
One of the biggest setbacks for women and LGBTQ+ people has been Turkey’s 2021 withdrawal from the — ironically named — Istanbul Convention, which is intended to prevent, prosecute and eliminate violence against women and promote gender equality.
Domestic violence is a severe problem that kills at least one woman every day in Turkey. According to data from the Monument Counter, a website that commemorates women who lost their lives to domestic violence, 824 women have been killed in just the past two years.
Gender parity is another failing across the country’s political spectrum. According to the country’s Women’s Platform for Equality, a rights group that has been tracing the candidates on the various parties’ electoral lists, a mere 117 female deputies are set to be elected to Turkey’s 600-seat parliament.
‘I have seen many Erdoğans in my life’
Zeynep Esmeray Özadikti, who has been an activist for trans rights for 30 years, looks set to be an exception to that trend. She is a candidate for the Workers’ Party of Turkey and the first openly trans woman with a good chance of making it to parliament.
In a café in Kurtuluş, a neighborhood in Istanbul where there are significant numbers of trans voters, Esmeray told POLITICO that, if elected, she would fight for the rights of LGBTQ+ people against discrimination, hate crimes and violence. “I am getting very positive feedback from the streets,” she said. “If we can judge it by looking at the streets then I’ll definitely be getting into the parliament.”
If Erdoğan stays in power, Esmeray believes he will take the country in a more religiously conservative direction, even aiming for Sharia law.
Ergen, the Velvele.net editor, echoed Esmeray’s line of thought. She feared that Article 10 in Turkey’s constitution — a part of the national charter that gives some vague protection to gender equality — might be doctored, paving the way to the possible criminalization of homosexuality.
“This is my biggest fear,” she says. “If they win, they are going to do it.”
Still, the fear of Erdoğan does not mean the LGBTQ+ community feels completely protected by the opposition, whose candidate Kemal Kılıçdaroğlu is leading in the polls ahead of Sunday’s first round vote.
Ergen thinks the right-wing parties within the wide-ranging opposition alliance could also lobby to make life harder for LGBTQ+ groups.
Kılıçdaroğlu himself is fairly guarded in his LGBTQ+ remarks, knowing that the government could easily turn the subject against him.
To Erdoğan, Turkey’s LGBTQ+ community represents “deviant structures” | Burak Kara/Getty Images
He is, however, committed to a trajectory toward EU norms. When asked for his stance by POLITICO, he said: “We defend all human rights. It is our common duty to defend human rights. Democracy demands it. You cannot alienate people based on their beliefs, identities and lifestyles, you have to respect everyone.”
Both Esmeray and Ergen believed the priority should be for Turkey to return the Istanbul Convention to reinforce some basic freedoms.
And both reckoned Turkey’s population was ahead of its politicians.
“I am more optimistic about people, not political parties,” said Ergen, who based her hopes on the breadth of civil society activities in Turkey.
Esmeray added: “I have seen many Erdoğans in my life. If he wins, we will continue fighting. If it comes to that, I will face him and tell him to kill me.”
In a community center in central London, a young child plays in a makeshift area as her caregiver rocks her stroller and chats to a friend.
The Oasis Centre in Waterloo sits in a four-story building that has a warm, inviting feeling, with plush chairs and lots of potted plants.
But it’s not your regular high street hangout. This is a haven for families and local people to escape the bitter squeeze of Britain’s cost-of-living crisis – if only for the afternoon.
Thousands of warm banks have opened their doors across the UK this winter, as household budgets are squeezed even further by spiking energy bills and inflation reaches a 40-year high, leaving many scrambling to pay for basic necessities. There are more than 3,000 registered organizations running warm banks in Britain, according to the Warm Welcome Campaign, an initiative that signposts community-led responses to the cost-of-living crisis.
“A lot of people are struggling,” Charlotte, a community and families worker at the center, tells CNN. Her full name is not being disclosed for privacy reasons.
“We haven’t even really got to the peak of the living crisis yet,” the 33-year-old mother-of-four adds. “No one should be choosing whether to put food on the table or to put the heating on.”
The hub is funded by donations from individuals and local businesses, as well as grant incomes from charitable trusts.
The cost of living has risen sharply since early 2021, according to data from the UK government. From October 2021 to October 2022, domestic gas and electricity prices increased by 129% and 66% respectively, the same research found.
The average annual energy bill surged 96% from last autumn to £2,500 (roughly $3,000), with the UK government intervening to cap the unit cost of gas and electricity bills at that level until April 2023. However, the total amount consumers pay for their energy depends on their consumption habits, where they live, how they pay for energy and what type of meter they use, according to the UK’s regulator, Ofgem.
Charlotte, who works at and uses the warm space in Waterloo, says she limits her gas and electricity use in her flat. Instead of turning on the heating in the evening, she and her partner sit under quilts and use hot water bottles to stay warm, she says.
She also anticipates her household energy costs increasing over Christmas, as her children, who are between 4 and 17 years old, spend more time at home during the school holidays. At the moment, Charlotte spends most days at the hub and said this habit will continue over the holidays to help alleviate her costs at home.
Grace Richardson is an adult services manager at Future Projects in Norwich, in eastern England, an organization that offers health, housing and financial support to residents. She says her team started planning over the summer to provide a warm space in the organization’s Baseline Centre, located in an area with significant poverty.
“This winter in particular, it’s extremely important that we’re offering a space that people can turn everything off at home and they can save money,” she tells CNN.
“We’ve got people here working full time and they cannot make ends meet. That’s where the real difference is.”
From young parents to pensioners to students in their 20s, Richardson says that people from all walks of life use the warm space, with about 25 attending each day. The warm bank, where staff serve meals, is subsidized by grant funding from the local council and private or corporate foundations, as well as donations from individuals.
Michael John Edward Easter, 57, says the service at the Baseline Centre has been a lifeline for him this winter.
Easter, who has lymphedema in both legs and arthritis in one knee, is unable to work. Speaking to CNN earlier this month, he said he’d turned the heating on in his one-bedroom flat just twice so far this year to avoid spiking energy costs and compensate for a 50% increase in his weekly supermarket bill.
He says he “was in a mess” when he first reached out to the Baseline Centre in January for welfare advice, as he was dealing with mobility challenges and craved a sense of community.
“I was so ashamed and embarrassed, but I had to cry out for help,” he says. “I needed help and I just didn’t know where to turn to. If I’m totally honest, I’m very lonely.”
Richardson suggests the need for warm banks is a result of government inaction.
“I think that it highlights just how far removed our government is right now from the reality of real life. I think it screams … the divide between us and them, it’s only getting wider,” she says. “We keep referring to this as a cost of living crisis, as though it’s a period of time we’re going to go through and we will come out the other side. Will we? It’s life or death.”
Energy prices have soared across Europe since fall 2021, driven in part by Russia’s war in Ukraine. But UK energy prices rose more sharply than in comparable economies such as France and Italy, analysts told CNN Business this summer.
In November, UK Prime Minister Rishi Sunak and Finance Minister Jeremy Hunt announced higher taxes and reduced public spending in an effort to heave the country out of a recession forecast to last just over a year and shrink its economy by just over 2%, according to the Office for Budget Responsibility. The UK is the only G7 economy that remains smaller than it was before the coronavirus pandemic, according to the Office for National Statistics.
The UK government also announced an Energy Bill Support Scheme worth £400 per eligible household, which will partially subsidize domestic energy bills from winter 2022 to 2023, as well as providing extra financial support to help pensioners pay their heating costs this winter under the Winter Fuel Payment scheme.
In December more than one million households with prepayment meters did not redeem their monthly energy support vouchers – included in the government’s Energy Bill Support Scheme – the BBC reported.
But Michael Marmot, a lead researcher in epidemiology and health inequalities, says years of austerity, paltry government support, cuts to spending on social welfare and infrastructure, and a lack of regulation in the UK’s energy market have plunged millions into fuel poverty.
“Poverty has been building up over the last dozen years and getting worse,” says Marmot, director of University College London’s Institute of Health Equity.
“We look the worst in G7 countries, we’re the only one in terms of recovery … that hasn’t gone back to where we were pre-pandemic. This is mismanagement on a colossal scale.”
An estimated 3.69 million households in the UK were in fuel poverty as of December 2020 compared with 6.99 million households in December 2022, Simon Francis, who coordinates the End Fuel Poverty Coalition, told CNN.
This figure is set to steadily increase, with more than three-quarters of UK households – 53 million people – forecast to be in fuel poverty by the new year, according to research by the University of York in northern England.
The human rights organization Save the Children has distributed 2,344 direct grants to low-income families in the UK in the past year, the Guardian reported. The head of the charity also called on the government to provide more support for families, as it predicts acute financial hardship for millions in January.
“What do you want a well-functioning society to do? At the minimum, people should be able to eat, to feed their families, have a safe dwelling … and a safe dwelling includes one that’s warm enough,” Marmot adds.
Susan Aitken, leader of Glasgow City Council in Scotland, says warm banks are “not a solution” to the cost of living crisis but rather “an emergency service.” The council has established more than 30 warm banks across the city in spaces including church halls, libraries, sports venues and cafes, and that number is expected to increase, according to Aitken. The service runs on council budgets and charitable donations.
“The solution is for people to be able to stay in their own homes,” she says.
“It’s bad enough that food banks have become a permanent fixture of communities across the UK now. To have places that people have to go to because they can’t afford to heat their own home is an absolute indictment (of government policy).”
CNN has reached out to the UK government for comment, but it did not respond.
Back at the Oasis Centre, locals show up for anything from knitting circles to after-school clubs offering free hot meals.
Steve Chalke, the hub’s founder, says about 200 people use the facility daily for warmth. He says that he does not advertise the service as a warm bank because it is “dehumanizing.” Instead, he coordinates community-led events that are held in warm venues across the city.
“The idea is to not inquire and to not ask,” he says. “It’s stigmatizing and it’s traumatizing, you know, so you end up feeling a non-person. So we want to take away that stigma in every way we can.”
Francis, the End Fuel Poverty Coalition coordinator, says one of the most significant challenges to curbing fuel poverty is removing the taboo that people may feel when asking for support.
“I think one of the problems with fuel poverty … is it is quite a hidden form of poverty. People kind of … try and cover it up and try and get by,” he says. “We’re not going to know the full extent of the pain that people are suffering this winter, because there will be ways that people will disguise what it is that they’re doing.”
The mental health costs of fuel poverty are far-reaching, according to a 2020 report from the UCL Institute of Health Equity. The report said that young people living in cold homes are seven times more likely to have symptoms of poor mental health compared with those living in warm homes.
“There’s surprisingly lots of people that do have work, but yet it’s not enough to keep afloat, at least without needing some help,” says Bintu Tijani, a mother-of-four who goes to the Oasis Centre at least three times a week to warm up. “It’s having a significant impact on people’s wellbeing, mental health and wellbeing.”
Looking ahead to Christmas and the New Year, Francis says he is also concerned about the strain that treatment needed for medical conditions exacerbated or caused by cold weather will have on Britain’s National Health Service (NHS).
“We’re still calling for the government to realize that if it doesn’t take action to support those who are the most vulnerable … it is going to see a huge increase in the number of people turning up at the NHS’ door to seek help because of the fact that they are now living in a cold, damp home and it is making them sick,” he says.
Europe, the world’s biggest consumer of chocolate, and West Africa, the leading grower of the cocoa beans used to make it, share a common goal to make the sector sustainable.
But they have opposing views on how to put an end to the social, economic and environmental harms caused by satisfying Europe’s sweet tooth, heralding a showdown over who will bear the costs of complying: Big Chocolate or cocoa farmers.
The EU is finalizing regulations that seek to ensure that chocolate entering the market is free from deforestation and child labor. At the same time, Ghana and Ivory Coast, the world’s biggest cocoa producers, are demanding higher prices. That’s vital, they say, to make sustainable chocolate a possibility — and not a pipe dream.
The stakes are high: For the EU, cocoa is a test case for how companies and producers react when the bloc tries to impose higher standards. For producers, the push to set up a cartel could drive up prices in the short term — but also risks stimulating oversupply and ultimately causing a price crash that would deepen the poverty already suffered by most cocoa farmers. Chocolate makers, facing rising costs and greater scrutiny, may reroute supply chains to other cocoa-producing countries seen as less risky.
Doing nothing is not an option, said Alex Assanvo, who heads the joint West African initiative to support cocoa prices.
“We are not asking to pay them more, we are asking to pay them a fair price,” Assanvo told POLITICO in an interview. “If we believe that this is going to create oversupply, well then I don’t know, maybe we should stop eating chocolate.”
Bittersweet taste
Chocolate may be sweet but the industry that makes it is not. Most of the beans used to produce the world’s supply are grown by impoverished West African farmers; all too often from trees planted on deforested land and harvested by children. One problem drives the others. Poverty pushes farmers to chop down forests to produce more beans and profits and to put children to work as they cannot afford to pay wages to adult laborers.
To address this, Ghana and Ivory Coast, which produce 60 percent of the world’s cocoa, formed an export cartel in 2019 modeled on the Organization of the Petroleum Exporting Countries (OPEC). They introduced a $400 per ton Living Income Differential, which aims to bring the floor price up enough to cover the cost of production.
In public, big chocolate manufacturers and traders, including Barry Callebaut, Cargill, Ferrero, Hersey, Lindt, Mars, Mondelez and Nestlé, welcomed the initiative.
Yet behind the scenes many of the firms — which between them account for about 90 percent of the industry’s $130 billion in annual profits — have done everything possible to avoid paying the premium and to drive prices back down, according to the Ivorian Coffee-Cocoa Council (CCC), the Ghana Cocoa Board (Cocobod) and their joint Initiative Cacao Ivory Coast-Ghana (ICCIG).
The companies that responded to requests for comment from POLITICO said that they have paid the Living Income Differential (LID) since its introduction. The Ghanian and Ivorian trade boards and the ICCIG claim, however, that they have negated the LID’s value by forcing down a different premium, the origin differential.
Fed up, these countries boycotted the World Cocoa Foundation Partnership Meeting at the end of October in Brussels. They then gave the companies a deadline: commit to the premiums by November 20 or the countries would ban their buyers from visiting fields to carry out harvest forecasts and suspend their Corporate Social Responsibility programs – which sell well with ethically-minded consumers.
More harm than good?
Another proposed remedy comes from Brussels. Cocoa is one of the products to which the new EU legislation on due diligence — Brussels speak for supply-chain oversight and compliance — would apply.
Under this, large firms operating in the bloc will be forced to evaluate their global supply chains for human rights and environmental abuses, and compensate injured parties. In theory, this should reduce deforestation and child labor and improve the lot of farmers.
Yet, as European ambassadors thrash out the terms — and big players like France push for them to be watered down — concerns are growing that the legislation could turn out at best to be ineffective in practice, and at worst do more harm than good.
Cocoa farmers, and the NGOs that support them, have reason to be skeptical: Back in 2000, a BBC documentary exposed the widespread use of child labor on cocoa plantations in Ivory Coast and Ghana. The resulting media pressure led to a proposal for legislation in the United States forcing companies to certify chocolate bars free of child labor.
Companies pushed back hard, Antonie Fountain, managing director of cocoa NGO coalition The Voice Network, told POLITICO. The proposal was dropped and companies committed instead to a voluntary plan to solve child labor, he explained: “And that turned into a two-decade failure of policy.”
The resulting patchwork of pilot projects failed to transform the sector. Despite an initial decline, nearly 20 years after the framework was introduced 790,000 children in Ivory Coast and 770,000 in Ghana are still working in cocoa, with 95 percent of them exposed to the worst forms of child labor, according to a 2020 report.
Deforestation has meanwhile accelerated.
Ivory Coast has lost up to 90 percent of its forest in the last half century. Between 2000 and 2019 alone 2.4 million hectares of forest was cleared for cocoa farms, representing 45 percent of the total deforestation and forest degradation in the country, according to Trase, a data-driven transparency initiative.
The government’s attempts to safeguard what remains are half-hearted and often undermined by corruption: In 2019 a quarter of Ivory Coast’s cocoa production was in protected areas and forest reserves, the Trase study found. This left the EU exposed to 838,000 hectares of deforestation from Ivorian cocoa. Commodity trader Cargill leads the pack, according to Trase, with its 2019 exports exposed to 183,000 hectares of deforestation.
Over the last decade companies have proposed corporate social responsibility (CSR) initiatives that aim to tackle both ills. For instance, Mondelez, the maker of Cadbury and Toblerone, recently committed $600 million to tackle deforestation and forced labor in cocoa-producing countries, bringing its total funding for environmental and social issues to $1 billion since 2010.
These sums are, however, puny by comparison with the profits earned by those firms, said Fountain. Mondelez returned $2.5 billion to investors in the first half of 2022.
Mondelez is “excited” about its investments, the firm said in a statement. But it is calling for more sector-wide actions and rethinking its incentive model. Cargill did not respond to a request for comment.
Social responsibility
The big numbers that companies cite about their CSR programs’ reach often boil down to one-off training sessions on productivity for farmers, Uwe Gneiting, senior researcher at Oxfam, told POLITICO. This was the case for 98 percent of the 400 farmers interviewed for research recently carried out by Gneiting and others from the charity into the impact of sustainability programs over the last decade in Ghana on farmers’ incomes.
The research finds that CSR initiatives, which companies use to tout their sustainability credentials to European consumers, have not meaningfully increased farmers’ productivity or profits, pointed out Gneiting. In fact, farmers end up shouldering the associated costs, because companies offer the training but do not pay for extra labor or the fertilizer that farmers need to put it into action.
Instead, Ghanian and Ivorian farmers have been hammered by the soaring cost of production and of living over the last three years, finds the new Oxfam research. Fertilizer costs have increased by more than 200 percent, said Gneiting, along with labor and transportation costs. That in turn has contributed to a decline in yields that have also been hurt by climate change, with weather patterns becoming increasingly unpredictable.
All of this has meant incomes have declined close to 20 percent since 2019, said Gneiting, which for farmers already living on the poverty line is “existential.” The decline would have been much worse, he added, if it hadn’t been for the Living Income Differential. Nonetheless, 90 percent of the farmers interviewed say they are worse off than three years ago.
Over the same period, as cocoa prices have fallen, companies have made “windfall gains,” said Isaac Gyamfi, director of Solidaridad West Africa. “The raw material became cheaper for them. But the price of chocolate didn’t change.”
Can Brussels sort it out?
To what extent the new due diligence directive will make a difference depends on the final text that was put to a meeting of EU trade ministers on Friday.
When the European Commission first came up with the draft it was seen as a game changer, but subsequent wrangling over the regulation’s scope has raised doubts. Last week, ambassadors from France, Spain, Italy and some smaller countries voted down the text in the European Council, seeing the value chain and civil liability provisions as too wide and too ambitious.
Two-thirds of Ivorian cocoa is exported to the EU and the U.K. | Issouf Sanogo/AFP via Getty Images
A European diplomat told POLITICO that France supported the proposed directive “very strongly,” and its view that it was important to concentrate on the “upstream” part of the supply chain was shared by a majority of EU member countries.
NGOs take the view that, while it’s positive that the EU is proposing broad legislation, there is a risk that it ends up replicating the mistakes that undermined the voluntary initiatives. One of these is the potential limitation of the companies’ due diligence obligations to “established business relations.”
“What you’re going to get is a whole bunch of companies that are going to try to have as few established business relations as possible, which just makes supplying commodities more precarious, rather than less,” said Fountain.
Analysis from Trase finds that 55 percent of Ivorian cocoa, two-thirds of which is exported to the EU and the U.K., comes from untraceable sources. NGOs working on cocoa and on other sectors due to be impacted by the new directive are calling for it to be applied to business relationships based on their risk rather than their duration.
The civil liability mechanism, which should guarantee compensation for people whose rights have been violated, has also come under scrutiny. The latest compromise proposal debated in the Council, seen by POLITICO, reduces the risk of companies getting sued by stipulating that a company can only be held liable if it “intentionally or negligently” failed to comply with a due diligence obligation aimed to protect a “natural or legal person” — not a forest, for instance — and subsequently caused damage to that person’s “legal interest protected under national law.” But, it states, a company cannot be held liable “if the damage was caused only by its business partners in its chain of activities.”
Earlier this year, the EU, Ivory Coast and Ghana and the cocoa sector all committed to a roadmap to make cocoa more sustainable, which, they agreed, includes improving farmers’ incomes. Yet it remains unclear whether this will be mentioned in the final draft of the due diligence directive.
“Sustainability cannot exist without a living income,” said Heidi Hautala, Green MEP and chair of the European Parliament’s Responsible Business Conduct Working Group. Hautala, who is among those pushing for the reference to a living income to be included in the final text, added that responsible purchasing practices are “a prerequisite for respect of human rights, environment and climate.”
Living income “needs to be a part of it because otherwise you’re in trouble,” agreed Fountain.
“If you don’t look at what does a farmer need in order to comply, if you don’t make sure that a farmer actually has the right set of income, then all you’re doing is pushing the responsibility for being sustainable back to the farmer. And this is what we’ve done for the last two decades.”
LIVERPOOL, England — On the long picket line outside the gates of Liverpool’s Peel Port, rain-soaked dock workers warm themselves with cups of tea as they listen to 1980s pop.
Dozens of buses, cars and trucks honk in solidarity as they pass.
Dockers’ strikes are not new to Liverpool, nor is depravation. But this latest walk-out at Britain’s fourth-largest port is part of something much bigger, a great wave of public and private sector strikes taking place across the U.K. Railways, postal services, law courts and garbage collections are among the many public services grinding to a halt.
The immediate cause of the discontent, as elsewhere, is the rising cost of living. Inflation in the United Kingdom breached the 10 percent mark this year, with wages failing to keep pace.
But the U.K.’s economic woes long predate the current crisis. For more than a decade, Britain has been beset by weak economic growth, anaemic productivity, and stagnant private and public sector investment. Since 2016, its political leadership has been in a state of Brexit-induced flux.
Half a century after U.S. Secretary of State Henry Kissinger looked at the U.K.’s 1970s economic malaise and declared that “Britain is a tragedy,” the United Kingdom is heading to be the sick man of Europe once again.
The immediate cause of Liverpool dockers’ discontent that brought them to strike is the rising cost of living. | Christopher Furlong/Getty Images
Here in Liverpool, the “scars run very deep,” said Paul Turking, a dock worker in his late 30s. British voters, he added, have “been misled” by politicians’ promises to “level up” the country by investing heavily in regional economies. Conservatives “will promise you the world and then pull the carpet out from under your feet,” he complained.
“There’s no middle class no more,” said John Delij, a Peel Port veteran of 15 years. He sees the cost-of-living crisis and economic stagnation whittling away the middle rung of the economic ladder.
“How many billionaires do we have?” Delij asked, wondering how Britain could be the sixth-largest economy in the world with a record number of billionaires when food bank use is 35 percent above its pre-pandemic level. “The workers put money back into the economy,” he said.
What would they do if they were in charge? “Invest in affordable housing,” said Turking. “Housing and jobs.”
Falling behind
The British economy has been struck by particular turbulence over recent weeks. The cost of government borrowing soared in the wake of former PM Liz Truss’ disastrous mini-budget on September 23, with the U.K.’s central bank forced to step in and steady the bond markets.
But while the swift installation of Rishi Sunak, the former chancellor, as prime minister seems to have restored a modicum of calm, the economic backdrop remains bleak. Spending and welfare cuts are coming. Taxes are certain to rise. And the underlying problems cut deep.
U.K. productivity growth since the financial crisis has trailed that of comparator nations such as the U.S., France and Germany. As such, people’s median incomes also lag behind neighboring countries over the same period. Only Russia is forecast to have worse economic growth among the G20 nations in 2023.
In 1976, the U.K. — facing stagflation, a global energy crisis, a current account deficit and labor unrest — had to be bailed out by the International Monetary Fund. It feels far-fetched, but today some are warning it could happen again.
The U.K. is spluttering its way through an illness brought about in part through a series of self-inflicted wounds that have undermined the basic pillars of any economy: confidence and stability.
The political and economic malaise is such that it has prompted unwanted comparisons with countries whose misfortunes Britain once watched amusedly from afar.
“The existential risk to the U.K. … is not that we’re suddenly going to go off an economic cliff, or that the country’s going to descend into civil war or whatever,” said Jonathan Portes, professor of economics at King’s College London. “It’s that we will become like Italy.”
Portes, of course, does not mean a country blessed with good weather and fine food — but an economy hobbled by persistently low growth, caught in a dysfunctional political loop that lurches between “corrupt and incompetent right-wing populists” and “well-intentioned technocrats who can’t actually seem to turn the ship around.”
“That’s not the future that we want in the U.K,” he said.
Reviving the U.K.’s flatlining economy will not happen overnight. As Italy’s experience demonstrates, it’s one thing to diagnose an illness — another to cure it.
Experts speak of an unbalanced model heavily reliant upon Britain’s services sector and beset with low productivity, a result of years of underinvestment and a flexible labor market which delivers low unemployment but often insecure and low-paid work.
“We’re not investing in skills; businesses aren’t investing,” said Xiaowei Xu, senior research economist at the Institute for Fiscal Studies. “It’s not that surprising that we’re not getting productivity growth.”
But any attempt to address the country’s ailments will require its economic stewards to understand their underlying causes — and those stretch back at least to the first truly global crisis of the 21st century.
Crash and burn
The 2008 financial crisis hammered economies around the world, and the U.K. was no exception. Its economy shrunk by more than 6 percent between the first quarter of 2008 and the second quarter of 2009. Five years passed before it returned to its pre-recession size.
For Britain, the crisis in fact began in September 2007, a year before the collapse of Lehman Brothers, when wobbles in the U.S. subprime mortgage market sparked a run on the British bank Northern Rock.
The U.K. discovered it was particularly vulnerable to such a shock. Over the second half of the 20th century, its manufacturing base had largely eroded as its services sector expanded, with financial and professional services and real estate among the key drivers. As the Bank of England put it: “The interconnectedness of global finance meant that the U.K. financial system had become dangerously exposed to the fall-out from the U.S. sub-prime mortgage market.”
The crisis was a “big shock to the U.K.’s broad economic model,” said John Springford, from the Centre for European Reform. Productivity took an immediate hit as exports of financial services plunged. It never fully recovered.
“Productivity before the crash was basically, ‘Can we create lots and lots of debt and generate lots and lots of income on the back of this? Can we invent collateralized debt obligations and trade them in vast volumes?’” said James Meadway, director of the Progressive Economy Forum and a former adviser to Labour’s left-wing former shadow chancellor, John McDonnell.
A post-crash clampdown on City practises had an obvious impact.
“This is a major part of the British economy, so if it’s suddenly not performing the way it used to — for good reasons — things overall are going to look a bit shaky,” Meadway added.
The shock did not contain itself to the economy. In a pattern that would be repeated, and accentuated, in the coming years, it sent shuddering waves through the country’s political system, too.
The 2010 election was fought on how to best repair Britain’s broken economy. In 2009, the U.K. had the second-highest budget deficit in the G7, trailing only the U.S., according to the U.K. government’s own fiscal watchdog, the Office for Budget Responsibility (OBR).
The Conservative manifesto declared “our economy is overwhelmed by debt,” and promised to close the U.K.’s mounting budget deficit in five years with sharp public sector cuts. The incumbent Labour government responded by pledging to halve the deficit by 2014 with “deeper and tougher” cuts in public spending than the significant reductions overseen by former Conservative Prime Minister Margaret Thatcher in the 1980s.
The election returned a hung parliament, with the Conservatives entering into a coalition with the Liberal Democrats. The age of austerity was ushered in.
Austerity nation
Defenders of then-Chancellor George Osborne’s austerity program insist it saved Britain from the sort of market-led calamity witnessed this fall, and put the U.K. economy in a condition to weather subsequent global crises such as the COVID-19 pandemic and the fallout from the war in Ukraine.
“That hard work made policies like furlough and the energy price cap possible,” said Rupert Harrison, one of Osborne’s closest Treasury advisers.
Pointing to the brutal market response to Truss’ freewheeling economic plans, Harrison praised the “wisdom” of the coalition in prioritizing tackling the U.K.’s debt-GDP ratio. “You never know when you will be vulnerable to a loss of credibility,” he noted.
But Osborne’s detractors argue austerity — which saw deep cuts to community services such as libraries and adult social care; courts and prisons services; road maintenance; the police and so much more — also stripped away much of the U.K.’s social fabric, causing lasting and profound economic damage. A recent study claimed austerity was responsible for hundreds of thousands of excess deaths.
Under Osborne’s plan, three-quarters of the fiscal consolidation was to be delivered by spending cuts. With the exception of the National Health Service, schools and aid spending, all government budgets were slashed; public sector pay was frozen; taxes (mainly VAT) rose.
But while the government came close to delivering its fiscal tightening target for 2014-15, “the persistent underperformance of productivity and real GDP over that period meant the deficit remained higher than initially expected,” the OBR said. By his own measure, Osborne had failed, and was forced to push back his deficit-elimination target further. Austerity would have to continue into the second half of the 2010s.
Many economists contend that the fiscal belt-tightening sucked demand out of the economy and worsened Britain’s productivity crisis by stifling investment. “That certainly did hit U.K. growth and did some permanent damage,” said King’s College London’s Portes.
“If that investment isn’t there, other people start to find it less attractive to open businesses,” former Labour aide Meadway added. “If your railways aren’t actually very good … it does add up to a problem for businesses.”
A 2015 study found U.K. productivity, as measured by GDP per hour worked, was now lower than in the rest of the G7 by a whopping 18 percentage points.
“Frankly, nobody knows the whole answer,” Osborne said of Britain’s productivity conundrum in May 2015. “But what I do know is that I’d much rather have the productivity challenge than the challenge of mass unemployment.”
‘Jobs miracle’
Rising employment was indeed a signature achievement of the coalition years. Unemployment dropped below 6 percent across the U.K. by the end of the parliament in 2015, with just Germany and Austria achieving a lower rate of joblessness among the then-28 EU states. Real-term wages, however, took nearly a decade to recover to pre-crisis levels.
Economists like Meadway contend that the rise in employment came with a price, courtesy of Britain’s famously flexible labor market. He points to a Sports Direct warehouse in the East Midlands, where a 2015 Guardian investigation revealed the predominantly immigrant workforce was paid illegally low wages, while the working conditions were such that the facility was nicknamed “the gulag.”
The warehouse, it emerged, was built on a former coal mine, and for Meadway the symbolism neatly charts the U.K.’s move away from traditional heavy industry toward more precarious service sector employment. “It’s not a secure job anymore,” he said. “Once you have a very flexible labor market, the pressure on employers to pay more and the capacity for workers to bargain for more is very much reduced.”
Throughout the period, the Bank of England — the U.K.’s central bank — kept interest rates low and pursued a policy of quantitative easing. “That tends to distort what happens in the economy,” argued Meadway. QE, he said, is a “good [way of] getting money into the hands of people who already have quite a lot” and “doesn’t do much for people who depend on wage income.”
Meanwhile — whether necessary or not — the U.K.’s austerity policies undoubtedly worsened a decades-long trend of underinvestment in skills and research and development (Britain lags only Italy in the G7 on R&D spending). At British schools, there was a 9 percent real terms fall in per-pupil spending between 2009 and 2019, according to the Institute for Fiscal Studies’ Xu. “As countries get richer, usually you start spending more on education,” Xu noted.
Two senior ministers in the coalition government — David Gauke, who served in the Treasury throughout Osborne’s tenure, and ex-Lib Dem Business Secretary Vince Cable — have both accepted that the government might have focused more on higher taxation and less on cuts to public spending. But both also insisted the U.K had ultimately been correct to prioritize putting its public finances on a sounder footing.
It was February 2018 before Britain finally achieved Osborne’s goal of eliminating the deficit on its day-to-day budget.
Austerity was coming to an end, at last. But Osborne had already left the Treasury, 18 months earlier — swept away along with Cameron in the wake of a seismic national uprising.
***
David Cameron had won the 2015 election outright, despite — or perhaps because of — the stringent spending cuts his coalition government had overseen, more of which had been pledged in his 2015 manifesto. Also promised, of course, was a public vote on Britain’s EU membership.
The reasons for the leave vote that followed were many and complex — but few doubt that years of underinvestment in poorer parts of the U.K. were among them.
Regardless, the 2016 EU referendum triggered a period of political acrimony and turbulence not seen in Westminster for generations. With no pre-agreed model of what Brexit should actually entail, the U.K.’s future relationship with the EU became the subject of heated and protracted debate. After years of wrangling, Britain finally left the bloc at the end of January 2020, severing ties in a more profound way than many had envisaged.
While the twin crises of COVID and Ukraine have muddled the picture, most economists agree Brexit has already had a significant impact on the U.K. economy. The size of Britain’s trade flows relative to GDP has fallen further than other G7 countries, business investment growth trails the likes of Japan, South Korea and Italy, and the OBR has stuck by its March 2020 prediction that Brexit would reduce productivity and U.K. GDP by 4 percent.
Perhaps more significantly, Brexit has ushered in a period of political instability. As prime ministers come and go (the U.K. is now on its fifth since 2016), economic programs get neglected, or overturned. Overseas investors look on with trepidation.
“The evidence that the referendum outcome, and the kind of uncertainty and change in policy that it created, have led to low investment and low growth in the U.K. is fairly compelling,” said professor Stephen Millard, deputy director at the National Institute of Economic and Social Research.
Beyond the instability, the broader impact of the vote to leave remains contentious.
Portes argued — as many Remain supporters also do — that much harm was done by the decision to leave the EU’s single market. “It’s the facts, not the uncertainty that in my view is responsible for most of the damage,” he said.
Brexit supporters dismiss such claims.
“It’s difficult statistically to find much significant effect of Brexit on anything,” said professor Patrick Minford, founder member of Economists for Brexit. “There’s so much else going on, so much volatility.”
Minford, an economist favored by ex-PM Truss, acknowledged that “Brexit is disruptive in the short run, so it’s perfectly possible that you would get some short-run disruption.” But he added: “It was a long-term policy decision.”
Where next?
Plenty of economists can rattle off possible solutions, although actually delivering them has thus far evaded Britain’s political class. “It’s increasing investment, having more of a focus on the long-term, it’s having economic strategies that you set out and actually commit to over time,” says the IFS’ Xu. “As far as possible, it’s creating more certainty over economic policy.”
But in seeking to bring stability after the brief but chaotic Truss era, new U.K. Chancellor Jeremy Hunt has signaled a fresh period of austerity is on the way to plug the latest hole in the nation’s finances. Leveling Up Secretary Michael Gove told Times Radio that while, ideally, you wouldn’t want to reduce long-term capital investments, he was sure some spending on big projects “will be cut.”
This could be bad news for many of the U.K.’s long-awaited infrastructure schemes such as the HS2 high-speed rail line, which has been in the works for almost 15 years and already faces a familiar mix of local resistance, vested interests, and a sclerotic planning system.
“We have a real problem in the sense that the only way to really durably raise productivity growth for this country is for investments to pick up,” said Springford, from the Centre for European Reform. “And the headwinds to that are quite significant.”
For dock workers at Liverpool’s Peel Port, the prospect of a fresh round of austerity amid a cost-of-living crisis is too much to bear. “Workers all over this country need to stand up for themselves and join a union,” insisted Delij.
For him, it’s all about priorities — and the arguments still echo back to the great crash of 15 years ago. “They bailed the bankers out in 2007,” he said, “and can’t bail hungry people out now.”
LONDON — Rishi Sunak has promised to “fix” the economic mess wrought by his predecessor Liz Truss after being appointed the new U.K. prime minister.
In a sombre speech on the steps of No. 10 Downing Street Tuesday, Sunak — who has spent the day fleshing out a top team that includes many carryovers from the Truss administration — admitted “mistakes were made” by his predecessor and said he had been appointed “in part, to fix them.”
Truss only took office as U.K. PM last month, but was swiftly forced to resign after her radical economic plan spooked the markets, sent Sterling plunging and drove U.K. borrowing costs through the roof.
Sunak had predicted precisely these consequences during a summer-long Tory leadership contest — in which he finished a distant second place — and is now reaping the political reward.
“Our country is facing a profound economic crisis,” Sunak said, in his first major speech as PM. “I will place economic stability and confidence at the heart of this government’s agenda. This will mean difficult decisions to come.”
Sunak takes over at an intensely challenging time for the U.K. economy, with surging energy costs, mortgage rates and inflation triggering a cost-of-living crisis for millions of households and businesses. Britain also has a yawning budget deficit, and Sunak’s administration is expected to confirm a package of tax hikes and spending cuts in an emergency budget statement next week.
Key picks
In a bid to calm markets, Sunak on Tuesday confirmed he is keeping Jeremy Hunt in post as top finance minister. Hunt was brought in in the dying days of Truss’ short premiership to steady the ship, and swiftly junked much of her tax-cutting agenda.
Key Sunak ally and Cabinet veteran Dominic Raab will serve as deputy prime minister, a role he also played for Johnson.
And Sunak looks to have opted for a steady-as-she-goes approach to foreign policy, keeping in place Truss’ Foreign Secretary, James Cleverly, and her Defence Secretary Ben Wallace, who also held the role under Boris Johnson and earned plaudits for his response to the Russian invasion of Ukraine. In a remarkably swift Cabinet comeback, Suella Braverman — who left as Truss’ Home Secretary just a week ago with a blast at her boss — returns to the Home Office.
In one sign of change at the top of government, Truss ally Jacob Rees-Mogg resigned as business secretary. He had previously branded Sunak a “socialist” during the summer’s bitter leadership contest, although he recanted that view Tuesday morning. He will be replaced by leading Sunak backer Grant Shapps.
Speaking on steps of No. 10 Downing Street, the new PM insisted he was “not daunted” by the challenges ahead, adding: “I know the high office I have accepted, and I hope to live up to its demands.”
Sunak, 42, is the youngest British prime minister in modern history, and the first British-Asian to lead the country. He was formally invited to form a government by new British monarch King Charles III on Tuesday morning, having won the second Conservative leadership contest of the year the previous afternoon.
In his speech, Sunak also took a veiled swipe at his predecessor-but-one — and former boss — Johnson, who was forced to resign in July over a string of personal scandals.
“This government will have integrity, professionalism and accountability at every level,” Sunak said.
Johnson tweeted his congratulations to his bitter rival immediately after Sunak took office, insisting it was “the moment for every Conservative to give our new PM their full and wholehearted support.”
Newly-elected British PM Rishi Sunak has been formally invited to form a government by King Charles III | Pool photo by Aaron Chown/AFP via Getty Images
Truss bids farewell
In her farewell speech Tuesday, outgoing PM Truss said it had been “a huge honor” to lead the nation and showed few signs of contrition over her chaotic seven weeks in office.
“From my time as prime minister, I am more convinced than ever we need to be bold and confront the challenges that we face,” Truss said defiantly.
She even quoted the Roman philosopher Seneca, adding: “It is not because things are difficult that we do not dare. It is because we do not dare that they are difficult.”
Sunak won the latest Conservative leadership race after his rival Penny Mordaunt failed to secure the required 100 nominations from her fellow Conservative MPs to make it onto a head-to-head ballot. He also beat off a brief challenge from former PM Johnson, who decided to pull out of the contest Sunday night despite claiming — without evidence — to have secured enough private nominations to make the cut.
Sunak has only been an MP since 2015 but is well known to the British public, having served as chancellor for more than two years under Johnson before quitting in July over his former boss’ personal conduct.
Sunak had become wildly popular with the general public soon after his appointment in February 2020, having set up a multi-billion pound scheme to protect people’s salaries if their companies were struggling to keep them on during the COVID-19 pandemic.
But his approval ratings took a severe hit earlier this year after it emerged his wife Akshata Murty held a highly privileged “non-domiciled” tax status in Britain, which she later renounced. He was also criticized after it was revealed he until recently continued to hold a U.S. green card, allowing him to live and work in America — allowing opponents to suggest he might not have been fully committed to Britain.
ATLANTA—The three dozen young Black men and women who gathered in a church meeting room last Friday night were greeted with a rousing exhortation that had the added benefit of being true.
In welcoming remarks, Bryce Berry, a senior at nearby Morehouse College and the president of the Young Democrats of Georgia club, told the group that none of the party’s national-policy accomplishments of the past two years would have been possible without people like them. “Without young Georgians, young Black Georgians,” Berry said for emphasis, “there would be no Associate Justice Ketanji Brown Jackson, no American Rescue Plan … no Inflation Reduction Act, no student-debt relief, and no gun-safety bill.”
It was the sort of thing speakers always say to motivate a crowd at political rallies. But in this case it was historically accurate: Massive turnout and huge margins among young voters, especially young voters of color, were crucial to the twin runoff victories of Georgia Senators Jon Ossoff and Raphael Warnock in January 2021 that delivered Democrats their unexpected majority in the upper chamber.
Young adults have become an essential electoral asset for Democrats—and loom as a potentially decisive factor in determining whether the party can avoid the worst outcomes up and down the ballot this November. In particular, young voters may decide whether Democrats can preserve the fragile hold on the Senate that Georgia provided to them.
A sharp generation gap is among the most consistent findings in public polling across almost every competitive Senate race this year. Here in Georgia, for instance, an array of recent public polls (including surveys by Quinnipiac University, Marist College, Monmouth University, and the University of Georgia) have found Warnock leading the Republican Herschel Walker by as much as two to one among young adults from about 18 to 34 and consistently by a margin of about 10 percentage points among those in early middle age. Polls almost always show Walker at least slightly ahead among those in their later working years, and solidly leading among those 65 and older. (This week’s explosive allegations about Walker—the claim that he allegedly funded an abortion for a girlfriend and the subsequent accusations of domestic violence from his son—seem likely to weaken him, perhaps substantially, with every group, but are unlikely to erase these sharp generational differences.)
These patterns are so common across the competitive states that it’s hard to imagine Democrats maintaining their Senate majority unless young voters like those who gathered at Atlanta’s Allen Temple AME Church turn out in substantial numbers.
Compared with older generations, Millennials and members of Generation Z are more racially diverse, more likely to hold postsecondary degrees, and less likely to identify with any religious tradition. Both cohorts have leaned sharply Democratic since the first Millennials entered the electorate in large numbers in the 2004 election; the party has routinely carried about three-fifths of young adults in recent presidential contests. In 2018, Democrats hit a peak of support among young voters, winning two-thirds of those younger than 30 and three-fifths of those ages 30 to 44, according to estimates by Catalist, a Democratic targeting firm.
Millennials and Gen Z are especially crucial to Democratic fortunes across Sun Belt states like Georgia and Arizona. In this region, younger generations are far more racially diverse than the mostly white, older voters who provide the backbone of GOP strength. In Arizona, for instance, Latino voters and other people of color compose almost three-fifths of the population under 30 but less than one-fifth of the population over 65, according to calculations from census data by William Frey, a demographer at Brookings Metro. In Georgia, Black voters and other people of color represent half of eligible voters under 45 but only three in 10 of those over 65. The gap between what I’ve called “the brown and the gray”—the diverse younger and the mostly white older generations—is comparably large in Texas and Nevada and nearly as big in North Carolina, Frey’s data show.
For Democrats, this year’s nightmare scenario of losing both the House and Senate is a repeat of 2010 and 2014, when the GOP midterm sweeps were turbocharged by a catastrophic falloff in turnout among young people from the presidential race two years earlier.
The anemic youth turnout in those off-year elections during Barack Obama’s presidency fueled a widespread perception that Democrats now faced a structural disadvantage in midterms because the electorate in those years was destined to be much older and whiter than in the presidential contest. But the 2018 results upended that assumption: Much more robust turnout among young adults helped power the Democratic gains that allowed them to recapture the House of Representatives. Compared with 2014, youth turnout increased in every state in 2018, more than doubling across the country overall, Circle, a think tank at Tufts University that studies young voters, has calculated. Some of the biggest increases occurred in Sun Belt states where the youth population is the most racially diverse, including Georgia, Arizona, and Nevada.
The turnout surge continued into 2020, when exactly half of adults younger than 30 showed up to vote, a big increase from the 39 percent in 2016, Circle concluded. Georgia again ranked among the states with the biggest youth-turnout increase compared with 2016—a key factor in the Democrats’ razor-thin victories there in the presidential race and the two Senate runoffs.
Democrats this year are highly unlikely to win as big a share of youth voters as they did during their 2018 sweep (they didn’t even equal it in 2020). But one of the pivotal questions remaining for the 2022 election is how close Democrats can come to matching the strength with young voters they displayed while Donald Trump was in the White House.
Democrats face some serious headwinds. Never enthusiastic about President Joe Biden during the 2020 Democratic primaries, young people have given him lackluster approval ratings throughout his presidency. Generally operating with less of a financial cushion than older voters, young people have also been more affected by the highest inflation in four decades. “The cost of living is going up, but our salaries are not,” Alexia Brookins, a manager at a construction company, told me at the AME event sponsored by the group Millennials of Faith last weekend.
In a mid-September NPR/PBS NewsHour/Marist poll, just 37 percent of Millennials and Gen Z said that Biden’s actions had strengthened the economy; 55 percent said that he had weakened it. In a late-September Yahoo News/YouGov survey, only about one-fifth of young adults ages 18 to 44 said life was better for people like them since Biden took office (the rest said it was unchanged or worse).
Terrance Woodbury, a partner at HIT Strategies, a Democratic consulting firm that focuses on young voters of color, worries that these verdicts will make it difficult for Democrats to reach the turnout and margins they need among young voters. In polling that HIT recently conducted for the NAACP, he told me, three-fourths of Black adults younger than 50 said their lives had not improved since Biden took office.
Woodbury told me that although the media seem fixated on whether potential Republican gains among men will widen the Black gender gap this year, he expects that the “generational gap” in the African American community will be much wider. “Younger voters are much more likely to say Democrats take Black voters for granted, much less likely to approve of the direction of the country, and much less likely to approve of the performance of Democrats in Congress and the White House,” he told me. “All of that is significantly higher by generation than by gender. I actually do think there is a real risk of Democrats underperforming with young voters, and specifically young voters of color.” Equis Research, a Democratic polling firm that specializes in Latino voters, raised similar warnings about young Hispanic voters in a late-September memo analyzing the upcoming election.
But other factors may help Democrats approach, if not necessarily match, their recent advantages with young voters.
More young adults may vote in 2022 simply because so many of them registered and voted in 2018 and 2020. One reason for that is structural: “There are more young people on the voter rolls because of the [2018 and 2020] elections, which is a huge boost, because it means they are more likely to be contacted by parties and organizations,” and those contacts increase the likelihood of people voting, Abby Kiesa, Circle’s deputy director, told me.
The other key reason is attitudinal: Higher youth turnout may mean that not only is voting becoming a habit for those who have already done it; it is also becoming more expected among the 18-year-olds who age into the electorate every two years (more than 8 million of them since 2020, Circle projects). At the AME event, for instance, Kendeius Mitchell, a disability-claims manager, told me that youth engagement in Georgia is feeding on itself. “Just having it around so much in the conversation now is making people take accountability,” he said.
John Della Volpe, the director of polling at the Harvard Kennedy School Institute of Politics, sees the same trend in the institute’s national surveys. “Voting … could be becoming a part of this new generation and how they think,” he told me.
Also lifting Democratic hopes is the party’s summer succession of policy advances on issues important to young people. Della Volpe said the “No. 1” criticism of Biden among young adults in the Harvard poll was “ineffectiveness.” But the passage of the Inflation Reduction Act, with its sweeping provisions to combat climate change, and the president’s decision to cancel up to $20,000 in student debt for millions of borrowers have provided Democratic organizers and ad makers something they lacked earlier this year: evidence to argue to young adults that their votes did produce change on things they care about. Biden gave organizers another talking point yesterday afternoon, when he announced a sweeping pardon of all people convicted of simple marijuana possession under federal law.
On the ground in Georgia, Keron Blair, the chief organizing and field officer for the New Georgia Project, a grassroots political organization founded by the Democratic gubernatorial candidate Stacey Abrams, told me that with the Democrats’ recent successes, “it feels a little bit easier” than in the spring to make the case to young adults that their vote counts.
Looking across the overall record of Democrats since they took power, “people aren’t like, ‘Oh my God, this is amazing,’” Blair told me. “But people are clear that some of the wins and the political and economic shifts that we are seeing [are] the result of the [voting] choices that people have made.”
Also working for Democrats is the gulf in values between most young voters and the Trump-era Republican Party. Fully 70 percent of adults younger than 30, for instance, said in a Pew Research Center poll this summer that abortion should remain legal in all or most circumstances, by far the most of any age group. That places them in sharp opposition to a GOP that is intensifying talk of passing a national ban on abortion if it wins control of Congress. “If we maintain that [recent] surge among young voters and voters of color,” Woodbury said, “they are voting against the crazy on the other side.”
Although different public surveys have sent different signals about youth engagement, the latest IOP youth survey, which is considered a benchmark in the field, found that as many young people said they “definitely” intend to vote this fall as did in 2018.
That prospect points toward an incremental but inexorable power shift. In 2020, for the first time, Millennials and Gen Z roughly equaled Baby Boomers and their elders as a share of eligible voters. By 2024, the younger generations will establish a clear advantage. As their numbers grow, so does their capacity to influence the national direction. There’s no guarantee they will exercise that inherent power next month by turning out to vote in large numbers. But more young people appear to be recognizing how much their choices can matter. Berry, the young Georgia activist, told me that his message to his friends is centered on understanding the strength in numbers that they are accumulating: “I really impress on folks, ‘Look at what happened because of you. You understood the moment in 2020; now you have to understand the moment in 2022.’”
BIRMINGHAM, England — So in the end, Liz Truss was for turning. But the damage to her faltering administration may already have been done.
On Monday, Truss’ Chancellor Kwasi Kwarteng bowed to pressure from Conservative Party colleagues and dumped his flagship cut to the top rate of tax from 45p to 40p — a central component of last month’s so-called mini-budget.
Later it emerged he will also bring forward an announcement on how the tax cuts will be funded, having initially insisted the public — and the markets — must wait until November 23.
A parliamentary insurrection, which was rapidly gaining pace as MPs met for their annual party conference in Birmingham on Sunday, appears to have been quelled, for now.
Asked if he would now support the mini-budget in parliament following the abandonment of its most controversial measure, rebel ringleader Michael Gove said: “Yeah I think so, on the basis of everything that I know. There were lots of good things that they announced … The debate over the 45p tax increase obscured that.”
The market reaction was also mildly positive, with the bond and currency markets rallying somewhat following the announcement.
But most MPs and delegates in Birmingham believe it will take significantly more than a single U-turn to rebuild the political and fiscal credibility of the fledgling Truss administration, with some MPs fearful a revival is already out of reach.
“She started very poorly, and in my experience, what you see is what you get. People aren’t mysteriously really shit, and then become really good,” one senior Tory MP said.
Pissed-off
While a Tory rebellion appears to have been averted for now, few MPs believe it will be the last Truss faces in the difficult weeks and months ahead.
Even before Kwarteng’s now-infamous ‘fiscal event,’ Truss had plenty of detractors on Conservative benches. Only around a third of her own MPs backed her in the leadership contest, and after taking office she almost exclusively chose loyalists for her ministerial ranks. Those who backed her opponent Rishi Sunak were left out in the cold.
“Her party management has pissed people off,” the senior Tory MP quoted above said, with many of what they described as talented MPs questioning whether it was even worth backing the government in the long-term.
But while the “lightning rod” of the 45p tax rate had now been “neutralized,” according to one minister, backbenchers could soon find another hot topic and “push on that next.”
Chancellor Kwasi Kwarteng | Ian Forsyth/Getty Images
Two potential major flashpoints will be the new government’s approach to welfare payments, and funding public services. Ministers are currently undecided over whether to uprate benefits in line with inflation — as pledged by Boris Johnson’s administration — while also dropping heavy hints that cuts to the state are on their way.
The opposition Labour Party, now surging ahead in the polls, see political capital too in Truss’ stated plans to lift the cap on bankers’ bonuses and abandon a hike to corporation tax.
“They’ve still got a totally unfunded £17 billion [corporation] tax giveaway for the wealthiest businesses at a time when people and businesses are struggling with the cost of living.” one Labour official said, in a taste of the messaging Tory MPs will likely be up against at the next election.
Few Tory MPs are optimistic Truss can turn things around.
“Politics works as a pendulum. If it swings towards the middle it’s possible to pull it back. But if it swings too far it can become irreversible,” the minister quoted above said.
Writing for POLITICO, Boris Johnson’s former No. 10 comms chief Lee Cain said it was “unlikely” Truss’ reputation would ever recover.
“It didn’t need to be this way,” he wrote. “Many of the unforced errors could have been avoided if the PM had understood how to talk to the audience that matters most — the electorate.:
Benefit of the doubt
But voters may yet be more forgiving than some of Truss’ critics in the party, according to pollsters and focus group experts keeping a close eye on public opinion.
“We consistently find voters don’t mind a U-turn on an unpopular policy,” said Luke Tryl, director of the More in Common consultancy, which regularly hosts focus groups across the country.
“In fact one of the things we found during the leadership contest was that people quite liked the fact that Liz Truss changed her mind, because they felt that’s what normal people do,” he said.
But he cautioned that while voters don’t mind U-turns as one-offs, “a series of them starts to look chaotic and will worry voters about whether the government knows what it is doing to see the country through the turmoil.”
Fiscal credibility
Crucially, reversing just £2 billion of the proposed £45 billion of unfunded tax cuts seems insufficient, in isolation, to restore trust in the U.K. economy and bring down spiraling interest rates.
“When market trust has been shattered, as we saw last week, the uphill task of restoring credibility is extremely hard and even harder when strategies shift,” Charles Hepworth, investment director at GAM, said.
“The market currently has little faith that the prime minister and chancellor can restore credibility in the short term, and this puts further renewed pressure on U.K. risk assets.”
Neil Birrell, chief investment officer at Premier Miton Investors, agreed the U-turn would not solve the turmoil in financial markets.
“High inflation and high interest rates are not going away quickly, and economic growth is under severe threat,” he said.
“Markets still need to hear how the package will be funded,” added Iain Anderson, executive chairman at H/Advisers Cicero, who said the next fiscal statement planned for November 23 must be brought forward as a matter of urgency.
The first senior Tory MP quoted above lamented that the market turmoil following the mini-budget meant the Tory party would now “own interest rate rises — a lot of which were going to happen anyway.”
“I cannot remember in my life when any politician has recovered from such a savage self-inflicted wound,” Giles Wilkes, a senior fellow at the Institute for Government and partner at Flint Global, said.
“Gordon Brown recovered somewhat from the multiple slip-ups of 2007-08 with his commanding response to the global financial crisis, but even that wasn’t enough.”
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Annabelle Dickson, Esther Webber and Emilio Casalicchio
