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City comment: Energy crisis and Covid-19 show the UK’s just-in-time economy needs more resilience

·2-min read
Gas prices have spiked around 250% since the start of the year (Gareth Fuller/PA) (PA Archive)
Gas prices have spiked around 250% since the start of the year (Gareth Fuller/PA) (PA Archive)

What do factories, the NHS, and the energy sector have in common? All are operating by the seat of their pants.

Creaking just-in-time supply chains, Covid-19-stretched A&E wards and surging energy and prices have all shown up the lack of resilience across Britain over the last two years.

This is no accident — it’s by design.

Over the last few decades efficiency has been the watch word in boardrooms across both the private and public sectors. Spare capacity was viewed as waste to be stamped out, with savings redirected to investors or investments.

That logic may have worked in a globalized, pre-Covid world. But that’s not the world we’re living in any more.

Adam Tooze, the Columbia University professor known for his history of the financial crisis ‘Crashed’, argues in his new book ‘Shutdown’ that Covid is just the first of many unpredictable and interlinked crises humanity will face in the ‘Anthropocene’ era — the current moment of climate crisis we are living through.

“2020 shows us a new model of crisis and it’s likely to be our future,” Tooze told the Standard. “It’s a test run, a trial run, a warmup act, a prelude - take your pick.”

The energy crisis can be traced back to the climate: a long, cold winter and an unusually hot summer ran down gas supplies, contributing to the current high prices. Many more similar headaches are likely to emerge.

If we are to learn to live with Covid, then the economy must adapt to our new reality too. Spare capacity should be built up, not torn down. The seemingly never-ending rolling crises engulfing the UK’s economy right now shows we’re only as strong as our weakest link.

The government seems to have grasped the energy issue over the weekend, re-committing to nuclear as a way to help wean us off gas and build more options in the face of a crisis. We need this kind of flexibility across the economy. Now is the time to act.

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