What do the findings of the research on large British household debts indicate?
How much have British household energy bills increased in recent months?
How much have inflation rates risen over the past few months?
How did the UK government react to the request for wage reductions by the Bank of England?
Recent research shows that the rising cost of living in the UK has put a strain on British households due to a number of reasons, such as Brexit, Covid-19, fuel shortages and the effects of the war in Ukraine.
The Large Debts of British Households
Research shows that the number of British households struggling with huge debts has risen by a third in the last year, even before the spike in fuel prices. An analysis of the Bank of England research carried out by the Jubilee Debt Campaign shows that, by 2021, nearly 10% of households had serious problems repaying loans and interests. The average monthly home loan repayment rate in the UK rose to £373 last year, up 22% from a year earlier, the highest in at least a decade. The Jubilee Debt Campaign was based on a survey of more than 6,000 households in the UK in September 2021. Since then, millions of households have seen an increase in energy bills and are expected to see an increase next month.
Growing Energy Bills for British Households
Energy prices in the UK have risen in recent months due to the bankruptcy of gas and electricity companies and the fuel distribution crisis. As from next month, however, the average energy bill is expected to rise by 54% with an energy price cap increase. On the other hand, the temporary increase in the living allowance for low-income families, which had been in place since the beginning of the Covid-19 pandemic, was discontinued at the end of September. Rising food and petrol costs, meanwhile, have put more pressure on households since the study was conducted, and in the words of the Jubilee Debt Campaign, “pushing people who are already living on the edge further into debt and poverty.”
British Families Worried About Accumulating Debts
A separate survey last week also found that families are worried about rising debts as a result of the rising cost of living. In a related development, Citizens Advice reported that five million people have said they will not be able to afford the rising energy prices in April. According to the report, one in five people said they would likely resort to a credit card or loan to pay for living expenses in the next quarter.
Highest UK Inflation Rates in Thirty Years
A report by the Office for National Statistics (ONS) shows that inflation in February reached its highest level in nearly 30 years. The Consumer Price Index (CPI) rose from 5.5% in January to 6.2% in February, up by 0.7% from the previous month, the ONS said. This figure is higher than economists had predicted at 5.9%. According to the ONS, the biggest drivers in rising inflation have been the rising costs of living, including energy bills as well as transport, largely driven by rising fuel costs and second-hand car prices.
The Main Cause of the Jump in Inflation in February
The main reason for the jump in inflation in February was the increase in the prices of all goods and services in entertainment and culture (mainly games, toys and entertainment) and clothing and footwear. “Inflation rose steeply in February as prices increased for a wide range of goods and services, for products as diverse as food to toys and games,” said ONS chief economist Grant Fitzner. “Clothing and footwear saw a return to traditional February price rises after last year’s falls when many shops were closed, and furniture and flooring also contributed to the rise in inflation as prices started to recover following new year sales,” he added.
Recommendations by the Bank of England to Britons
The Bank of England has told Britons not to ask for pay rises from the government and the central bank due to staggering increases in the cost of living. The Bank of England (BoE) believes that demands for pay rises will hurt the UK economy in the current fight against unprecedented inflation. This is why trade unions across the UK have criticised Bank of England governor Andrew Bailey for telling the British to refrain from asking for more money. However, Bailey has acknowledged that the cost-of-living crisis may continue until 2024.
Britons Urged Not to Ask for Higher Wages
Andrew Bailey said in an interview a few days ago that businesses need to be careful about how much they pay to help fight the unprecedented inflation rates in the UK for the past 30 years. His remarks came hours after the BoE raised interest rates for the second time in three months. “Broadly, yes,” Bailey, whose last annual wage package was worth more than £575,538 ($ 779,309), said in response to a question about whether the BoE was urging workers not to ask for more money. He explained that while this was “painful” for workers, some “moderation of wage rises” was needed to eradicate inflation.
Cruel Request by the Bank of England
It is extremely cruel to tell hard-working people who have survived the pandemic and quarantines that they do not deserve a pay rise. According to Andrew Bailey, security guards, healthcare workers, waste collectors, shop workers, etc, have to choose between heating their homes and eating because their real wages have plummeted.
Request for Wage Reductions Rejected by the UK government
The spokesman for the British PM, Boris Johnson, also rejected Bailey’s demands for wage restraints, saying it is not the government’s role to “advise the strategic direction or management of private companies.” The British people are now enduring staggering costs of living. Even though inflation reached its highest level in 30 years in December, wages remain stagnant and households are under severe financial pressure. Economists worry that rising energy bills could push inflation rates over 7% by April, which is far higher than expected.
Inflation in the UK has been rising rapidly in recent weeks as a result of the country’s exit from the EU, the Covid-19 pandemic and rising fuel prices. The Bank of England forecasts that inflation will reach 7.25% next month. But experts predict that inflation will rise further as Ukraine’s war continues and commodity prices rise.
