What’s going on:
As Britain continues to battle the economic crisis, pressures are expected to worsen due to skyrocketing prices of food and energy, coupled with tax hikes and interest rate increases. Despite avoiding two consecutive quarters of economic decline, the financial struggles of households and companies remain tough.
In response, nurses, train drivers, ambulance workers, and other public-sector employees have gone on strike in an effort to secure higher pay, driven by the rising cost of living.
The U.K. has been struck more severely by the global economic downturn than other leading nations; consumer prices have escalated to heights unseen since the 1980s, with inflation reaching as high as 11.1% in October. On the other hand, the U.S. has witnessed a decline in inflation to 6.5% by December.
Why it matters:
The National Institute for Economic and Social Research’s analysis reveals that middle-class families will experience a staggering 13% drop in disposable income, amounting to a decrease of £4,000 ($4,840) in the upcoming financial year. Even more alarming is the fact that 25% of households won’t be able to cover their food and energy bills with take-home pay, which is a rise from last year’s 20%.
For economic forecasters, an alarming trend is the rise of people aged 50 to 65 leaving the workforce before their time, diminishing productivity.
How it’ll impact the future:
The National Institute for Economic and Social Research said, “The U.K. will likely avoid a protracted recession in 2023, but GDP growth is set to remain close to zero. However, with the cost-of-living crisis having a lasting effect on households, for at least 7 million it will certainly feel like a recession.”